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This is how credit life insurance payments can go wrong.

Two days ago, on Monday, FNB Life put out a statement, saying they expect to approve about a 100-million rand worth of credit life claims by June. They're currently processing between 2000 and 3000 claims a day. And they quoted the national credit act: payable in the event of death, disability, terminal illness, unemployment or other insurable risks...sounds wonderful.

Wendy Knowler, consumer journalist

Then I got a case from a woman who put in a claim, she's on sort of temporary indefinite retrenchment - her company is not operating at the moment. She applied - she took out a 150-thousand rand loan last April from FNB. She's been paying it off at 5300-odd a month which includes 480 rand a month for credit life insurance. It's not cheap. It was approved and they say they'd pay out for six months minimum and then let's see how it goes with your job. And then 12 days later they cancelled it - saying it's because she received a UIF payment. She said nowhere in the policy documentation she saw anything about a UIF payment which incidentally she did not apply for, her employer did. It was a third of her normal salary. I took this to FNB and they said it's not UIF it's 'temporary employer relief scheme' - but it's essentially from the government, paid to the employer and then paid to the employee - so it's not a salary...

Wendy Knowler, consumer journalist

Listen to the full story of the non-payment, and the outcome, below.

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This article first appeared on 702 : When credit life insurance goes wrong because of a UIF payment

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