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Credit Life Insurance Gives Cyclists Important Debt Cover

June 2020

The national lockdown due to COVID-19 has disrupted life as we know it. The way in which people keep healthy such as going to the gym and participating in sporting events has drastically been impacted. While the national lockdown is gradually being eased, gyms are still closed. As a result, a lot of South Africans are turning to walking, running, home workouts, and cycling to keep fit.

Pre lockdown, South African cycling was experiencing a boom on par with global levels. In fact, our country hosts the world’s two largest timed cycle races, the Cape Argus Cycle Race and the 94.7 Cycle Challenge.

Both events are dominated by amateur cyclists, who use the activity to stay fit, enjoy the outdoor life, and socialize with friends.

But, just like golf, getting involved in cycling can be an expensive exercise, with the cost of factory produced bikes ranging anywhere from R5 000 to a staggering R245 000.

'The initial capital expense can be difficult for a lot of people to deal with,’ Nkazi Sokhulu, co-founder and Chief Executive Officer at Yalu, the distributor of the Yalu Credit Life Insurance Plan which is underwritten by Old Mutual Alternative Risk Transfer. ‘Those who don’t have a lump sum for a bike already set aside often use a loan to get on the road quickly. Credit can be a very effective way to fund big ticket items.'

Of course, borrowing money always carries an element of risk, and this needs to be carefully managed. One of the key factors every borrower must consider is how they will manage the debt if they are retrenched and unable to make monthly payments. Similarly, it’s also important to protect family members from an imposed financial burden should the borrower meet with major life misfortunes, like death or disability.

'Retrenchment can seriously disrupt your financial life, and always needs to be factored into the risk equation. And the last thing anyone wants is to leave family members with the responsibility of making your loan payments,' says Sokhulu. ‘Fortunately, Credit Life Insurance (CLI) offers a simple solution to addressing these risks. It makes using credit to finance the cost of a bike a viable option.'

Credit Life Insurance is often, but not always, mandatory with certain types of loans. However, because the institution that offers the consumer the loan in the first place also frequently provides the Credit Life Insurance, it’s common for CLI policies to be bundled into a single overall payment structure. As a result, consumers can easily remain unaware of the fact that they have the policy at all. 

Consumers who want to establish whether they have Credit Life Insurance policies for existing credit lines can simply contact their service provider to find out if they have CLI cover in place. If they don’t have cover, taking out a Credit Life Insurance policy is a simple process. They should be aware, however, that not all CLI policies are the same - especially when it comes to pricing. 

'Monthly premiums for CLI policies vary, so it makes financial sense to shop around and choose the most cost-effective provider,’ says Sokhulu. 'This is actually also an important point to remember for people who already have CLI policies. Every South African has a legal right to choose their own CLI provider, and it’s not difficult to switch providers and save money. If you’ve only just discovered you have Credit Life Insurance, you should check what your monthly premium costs are, and whether they can be brought down.'

For those who aren't sure where to start, easily accessible CLI resources and tools are at hand. A quick visit to the Yalu website, for example, offers consumers an overview of their various CLI policies and tells them how much money they could save every month by switching providers. The whole process takes no more than five minutes.

'Activities like cycling offer fantastic lifestyle benefits, and the capital outlay is definitely worth it for people with a passion for the sport,' Sokhulu concludes. 'Using credit to finance the initial expense can be a good choice for a lot of people – as long as you have the right protection in place.'

Issue date: June 2020

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Yalu Financial Services (Pty) Ltd is an authorised Financial Services Provider FSP 48495
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