| (a) | where section 106(1A) is not applicable to the credit agreement, credit life insurance not exceeding, at any time during the life of the credit agreement, the total of the consumer’s outstanding obligations to the credit provider in terms of their agreement; and |
| (b) | credit insurance, other than credit life insurance— |
| (i) | in the case of a mortgage agreement, in respect of the immovable property that is subject to the mortgage, not exceeding the full asset value of that property; or |
| (ii) | in the case of a credit agreement that deals with movable property, against damage or loss of the property that forms the subject matter of the credit agreement, not exceeding, at any time during the life of the credit agreement, the total of the consumer’s outstanding obligations to the credit provider in terms of their agreement. |
[Section 106(1) substituted by section 19(a) of Notice No. 1081, GG 42649, dated 19 August 2019]
| (1A) | Where the term of a credit agreement exceeds six months, or such period as may be prescribed, and the principal debt does not exceed R50 000, or such amount as may be prescribed, the Minister may, after consultation with the Minister of Finance, prescribe requirements for the credit provider to require the consumer to enter into and maintain credit life insurance for the duration of the term of that credit agreement not exceeding, at any time during the life of the credit agreement, the total of the consumer’s outstanding obligations to the credit provider in terms of that credit agreement. |
[Section 106(1A) inserted by section 19(b) of Notice No. 1081, GG 42649, dated 19 August 2019]
| (2) | Despite subsection (1), a credit provider must not offer or demand that the consumer purchase or maintain insurance that is— |
| (b) | at an unreasonable cost to the consumer, |
having regard to the actual risk and liabilities involved in the credit agreement.
| (3) | In addition to insurance that may be required in terms of subsections (1) and (1A), a credit provider may offer a consumer optional insurance in relation to the obligations of the consumer under the credit agreement or relating to the possession, use, ownership or benefits of the goods or services supplied in terms of the credit agreement. |
[Section 106(3) substituted by section 19(c) of Notice No. 1081, GG 42649, dated 19 August 2019]
| (4) | If the credit provider proposes to the consumer the purchase of a particular policy of credit insurance as contemplated in subsection (1), (1A) or (3)— |
[Words preceding section 106(4)(a) substituted by section 19(d) of Notice No. 1081, GG 42649, dated 19 August 2019]
| (a) | the consumer must be given, and be informed of, the right to waive that proposed policy and substitute a policy of the consumer’s own choice, subject to subsection (6); |
| (b) | such policy must provide for payment of premiums by the consumer— |
| (i) | on a monthly basis in the case of small and intermediate agreements; or |
| (ii) | on a monthly or annual basis in the case of large agreements, |
for the duration of the credit agreement; and
| (c) | in the case of an annual premium the premium must be recovered from the consumer within the applicable year. |
| (5) | With respect to any policy of insurance arranged by a credit provider as contemplated in subsection (4), the credit provider must— |
| (a) | not add any surcharge, fee or additional premium above the actual cost of insurance arranged by that credit provider; |
| (b) | disclose to the consumer in the prescribed manner and form— |
| (i) | the cost to the consumer of any insurance supplied; and |
| (ii) | the amount of any fee, commission, remuneration or benefit receivable by the credit provider, in relation to that insurance; |
| (c) | explain the terms and conditions of the insurance policy to the consumer and provide the consumer with a copy of that policy; and |
| (d) | be a loss payee under the policy up to the settlement value at the occurrence of an insured contingency only and any remaining proceeds of the policy must be paid to the consumer. |
| (6) | If the consumer exercises the right under subsection 4(a) to substitute an insurance policy of the consumer’s own choice, the credit provider may require the consumer to provide the credit provider with the following written directions— |
| (a) | a valid direction in the prescribed manner and form requiring and permitting the credit provider to pay any premiums due under that policy during the term of the credit agreement on behalf of the consumer as they fall due, and to bill the consumer for the amount of such premiums; |
| (i) | on a monthly basis for small and intermediate agreements; and |
| (ii) | on a monthly or annual basis for large agreements; and |
| (b) | a valid direction to the insurer in the prescribed manner and form, naming the credit provider as a loss payee under the policy up to the settlement value at the happening of an insured contingency, and requiring the insurer, if an insured event occurs, to settle the consumer’s obligation under the credit agreement as a first charge against the proceeds of that policy at any time during the term of the credit agreement. |
| (7) | If the premiums under an insurance policy contemplated in this section are paid annually, the consumer is entitled, upon settlement of the credit agreement, to a refund of the unused portion of the final year’s premium. |
| (a) | The Minister may, in consultation with the Minister of Finance, prescribe the limit in respect of the cost of credit insurance that a credit provider may charge a consumer. |
| (b) | Where the requirement contemplated in subsection (1A) is prescribed, the Minister must, in consultation with the Minister of Finance, prescribe the limit in respect of the cost of credit life insurance contemplated in subsection (1A). |
[Section 106(8)(a)(b) substituted by section 19(e) of Notice No. 1081, GG 42649, dated 19 August 2019]
