Importance of understanding your insurance policy

THULANI Cele was, very sadly, a victim of low economic growth and the receiving end of retrenchments.

- NICOLA MAWSON

While he did the smart thing and started making payment arrangements to cover his loans, especially one he took out to do an MBA, paperwork around an insurance policy that would have helped cover part of this loan somehow got lost in the mix.

While not commenting on this particular matter, Denise Gabriels, Lead Ombud at the Life Insurance Division of the National Financial Ombud Scheme, said it’s important to not only read the paperwork carefully but also to check bank statements.

“There is a general duty on clients to go through their financial statements.

“This may alert the client that a credit life insurance premium is included in their loan instalment, and prompt them to enquire what the premium is for,” said Gabriels.

In this instance, however, Cele told Personal Finance he never received any information about insurance cover, and it was only when a call centre person asked him why he had not claimed that he realised that this could have been a solution.

“After two years of financial strain, two years of scraping by, two years of believing I was completely on my own... I discovered there was supposed to be a safety net all along.”

Gabriels explained that insurance to cover loans in case someone dies becomes disabled, or is retrenched is fairly typical.

Cele’s story goes back to 2019 when he was “fresh with optimism about furthering my education”. To do so, he went to an Old Mutual branch.

“The paperwork was signed in good faith — I assumed any important details would be properly disclosed,” he said.