Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

Credit Life Insurance

Learn the key points of this type of life insurance, and how it works. is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. We compare many, but not all, products and services. We are not credit intermediaries or brokers of consumer loans or other financial products. We do not sell any financial products, offer consumer loans or provide financial advice. We also do not arrange or mediate the signing of any contract. If you decide to apply for a product or service through our website you will be dealing directly with the provider of that product or service and not with us. We endeavour to ensure that the information on this site is current and accurate but you should confirm any information with the product or service provider and read the information they can provide. If you are unsure you should get independent advice before you apply for any product or commit to any plan. While we are independent, we may receive compensation from our partners for featured placement of their products or services. We may also receive compensation if you click on certain links posted on our site.

Fincheck Life Insurance

  • Lets you compare from a wide range of providers
  • Gives personalised offers based on your credit score and financial profile
  • Hassle-free online application process

What is credit life insurance?

Credit life insurance can cover loan repayments if you die before fully repaying your loan (or loans). It’s taken out to help pay off your outstanding debts when you pass away, with the value of the policy going directly to your creditors.

How does it work?

This form of life insurance is typically offered when you take out a loan, such as a home loan, car loan or a line of credit. Unlike many other types of life insurance, the value of credit life insurance doesn’t go to your beneficiaries, but to your creditors. The value of the policy dwindles over time as the outstanding balance on your loan decreases.

Before considering credit life insurance, ask yourself: do I already have disability insurance or a life insurance policy? If you do, the chances are good that your insurance policy covers loan repayments after an injury or death.


  • It takes care of your outstanding debts when you die.


  • Your beneficiaries won’t get the proceeds from your policy.

Is credit life insurance right for me?

Credit life insurance is marketed as a method of protecting your heirs from inheriting your debt, but the policy payout from a term of whole life policy (see below) is capable of providing the same coverage. While the premiums stay the same, coverage decreases over time, so consider alternative policy options before you apply.

What are some of the other types of life insurance to consider?

When comparing your life insurance options, you may want to consider:

  • Whole-of-life cover. This cover offers protection for your entire life. This means your insurance provider will pay-out in the event of your death – whenever it occurs. This type of life insurance will have much higher premiums than term insurance, because it means that the insurance provider is increasingly more likely, if not definitely, going to have to pay out in the event of your death.
  • Term insurance. This type of insurance lasts for a fixed period or term. If you pass away within the policy term, then your insurance company will pay a lump sum to your dependants. However, if you don’t pass away during the policy, then it lapses and you will no longer be covered, nor will you receive any form of payment.
  • Income protection insurance. This type of cover acts as a financial safety net if you’re unable to work due to a sudden illness, injury or death. It pays your family a percentage of your wage, for a set period. Read our guide for more about how income protection works.

Life insurance – key terms explained

These are some of the terms you might come across when you’re researching life insurance policies:

  • Beneficiary. The person, people or organizations that will receive the proceeds from your policy when you die.
  • Cash value. A tax-deferred savings account that earns interest over time according to a rate set by your insurer. It’s a key part of all permanent policies.
  • Death benefit. The amount of money paid out to your beneficiaries when you die.
  • Face value. Also called the coverage amount, this is the value of your policy. It’s directly linked to the death benefit. If you purchase a policy worth R2,000,000, then your beneficiaries should receive R2,000,000 when you die.
  • Premium. The fee you pay to keep your policy in force.
  • Term. The period of time your policy is active — like 10, 20 or 30 years.

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy Policy and Terms.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site