Credit life insurance is not cheap, especially when taken out on a large loan such as a mortgage.
In Angeline’s case, the premium on her outstanding bond balance of about R340,000 was R518 a month. She took out the home loan jointly with her mother 10 years ago, and in that time, despite a succession of punishing recent interest rate hikes and income challenges, she kept paying that credit life insurance premium, in the belief that should either of them die or become disabled the loan balance would be settled.
The bond instalment and insurance premium were debited in a single amount on her bank account every month.
That’s a significant detail, given what unfolded after the death of Angeline’s mother in October. When she lodged a claim on that credit life policy with FNB Insure, she was initially told that the policy had lapsed because the last premium they received from her was in February.
Angeline — who asked me not to use her surname as she hasn’t shared this story with the rest of her family — had two problems with that: no-one from FNB had let her know that and, more importantly, she had been, and still was, paying that premium via debit order every month.
Then came the bombshell: she was told that the policy had fallen away in March this year when her mother turned 65, in keeping with the terms and conditions of the policy. Angeline no longer had a copy of that policy, taken out a decade ago, so she asked FNB Insure to supply her with a copy of it, as she was not aware of the age limit. “They told me they couldn’t find it,” she said.
Her biggest questions were why she and her mother were not informed in March when the policy was apparently cancelled due to the latter’s age, and why the premium had not been deducted from her debit order amount at that point. Having shared her feelings on X, FNB’s customer care staffers engaged with Angeline about the circumstances of her case, but the outcome remained unchanged.
That’s when she sought my help. Responding to my queries about Angeline’s case, FNB Insure CEO Lee Bromfield said: “As standard practice, the policy of a product would fall away when one of the joint bondholders reaches the predetermined age limit of 65, which is based on the risk assessment inherent to the relevant insurance laws,” he said.
“The bank can confirm that it has met all its contractual obligations and the outcome of the claim was communicated and resolved with the customer on Friday, 24 November. We have made our best efforts to assist the applicant and apologise for the delayed policy cancellation notification due to the predetermined age limit.”
I think it would be more accurate to state that the bank has now made its best efforts to “assist” Angeline.
“For confidentiality purposes, we cannot divulge any additional details on this matter.” Ah, confidentiality. To protect whom, I wonder?
If you have credit life cover, check on the age cut-off. Not all insurers shrug off the risk when their policyholders turn 65; you can get credit life cover up to the age of 75. At a price, of course
The only clue in that response — and a vague one at that — that the bank’s insurance arm had done an about-turn on receiving my query was the word “resolved”.
So I tried again. “What does 'met all its contractual obligations' mean?” FNB: “We thoroughly assessed the claim and subsequently facilitated the claim payout to the home loan.”
Not a word about why that wasn’t done when Angeline contested the rejection of her claim. Was the 65 years old cut-off fully disclosed when the insurance was taken out, and if so, how? I asked. FNB: “Correct, the age 65 end-of-cover forms part of the terms and conditions which the applicant and co-applicant accepted and signed on July 12 2013.”
Angeline remains adamant that she’s yet to be given a copy of that signed document. Were they told when the mother reached 65 that the cover had fallen away? FNB: “Unfortunately, the cut-off communication was erroneously not triggered for the customer to inform them that the cover had fallen away. We acknowledged this error on our part and apologised to the customer for this.”
A very happy Angeline e-mailed me on Thursday to say: “I’ve just received a call from FNB Insure’s claims department confirming that they have paid out the R339,000 claim to FNB home loans, so the loan is now settled. This time they didn't mention the age cut-off. They said my premiums which had not been received from home loans were now received, hence the claim approval.”
Sometimes, it seems, communication doesn’t happen as it should. If you have credit life cover, check on the age cut-off. Not all insurers shrug off the risk when their policyholders turn 65; you can get credit life cover up to the age of 75. At a price, of course.
• Contact Knowler for advice with your consumer issues via email consumer@knowler.co.za or on X (Twitter) @wendyknowler
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