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Delfin – Credit Protection Insurance
Extending credit in the South African market has become costly and the risks are enormous.
To address this issue, Delter IT has teamed up with a company called Universal Choices Insurance to provide loan protection insurance specifically geared towards the micro lending industry. This credit protection insurance facility is directly integrated into Delfin and covers the borrower’s loan repayments in the case of death, disability and retrenchment. Traditionally, the micro lender pays the premium upfront and collected the premium later from the borrower, typically on the borrower’s pay date. This is not the case with our loan protection insurance: The borrower pays the premium together with his loan on his pay date and the credit insurance is paid from there over to the insurer. There are no upfront premiums and the insurance is only paid on activated loans. This means that the micro lender doesn’t pay any insurance upfront and even earns commission on successful premium collections.
Benefits for the customer:
The customer’s loan is covered by the credit provider in the case of:
- Cover includes a Death Benefit of up to R 5000 at no additional fee
- No maximum age
- No medicals checks required
Benefits for the credit provider:
- Fully integrated with Delfin, thus ensuring no extra administration
- Monthly commission is paid to the credit provider on collected premiums
- No waiting periods for claim payments – claims are paid out weekly
- No start up costs OR monthly costs
- The borrower is covered from the date the loan is issued and pays the premium when he pays his instalment
- Only premiums collected by the credit provider are paid over
- A death benefit is paid to the deceased family – over and above the claim payment – which makes the product desirable and gives an edge over competitors
- Set up includes training for office staff, full colour posters to be displayed in the office and full colour pamphlets for borrowers to take home with them explaining the product
Cost & commission:
- Insurance premiums, paid by the borrower, are collected via debit order from the credit provider in arrears. (For the previous month).
- Only insurance premiums collected successfully from the borrower will be payable to the insurer.
- Insurance premium rate : 1 % to 3.5 %
- Commission paid to micro lender : 12 % to 18 %
- Should the borrower have an existing credit life policy that covers his loan in the case of his death then that policy may be substituted for this one.
- The insurance premium is calculated on the outstanding monthly balance and split evenly over the term of the loan.
Death benefit payout structure:
R 1 – R 999
R 1000 – R 1999
R 2000 and upwards
The Death benefit is paid directly into the beneficiary’s bank account.