Increased Home Loans see Life Insurance Sales Up

February 22 - The South African insurance industry has seen an increase in the number of the life insurance policies, as banks and financial institutions loosen their criteria for people to obtain home loans.

Since the introduction of the National Credit Act, which came almost hand in hand with the recession, there has been a drastic drop in the number of people applying for and receiving approval for home loans.

Banks have been reluctant to offer loans to people who they believed would not be able to pay their monthly instalments, while the recession also put a dampening on the market and led to the drop in value of the average home in South Africa.

However, now with the property market picking up at a steady pace thanks to the end of the recession and the World Cup in June, more and more people are seeking property.

Banks have also relaxed their criteria to a point where homes are being snapped up at an incredible pace.

One of the first requirements before potential homeowners can become eligible for a mortgage is to prove that they have life insurance that will cover the amount of the loan in the event of their death.

As such, the insurance industry has also seen a huge increase in policies being taken out as more and more people seek life insurance.

Life insurance is considered one of the most pertinent forms of cover for anybody, but especially for those with a family. It is imperative to ensure that a family is well cared for in case of anything happening, and that includes knowing that the family home will be paid for.

Banks generally require that the life insurance policy be five times the policyholders annual salary and the amount of the home mortgage.