Insurance and retrenchment
Our company has been put into business rescue. If I take a voluntary retrenchment package, will I still qualify to have my loan and credit card paid? I have retrenchment cover with Absa and Standard Bank. City Press replies:
Unfortunately, according to Absa and Standard Bank, retrenchment cover does not include voluntary retrenchment, which is a specific exclusion in terms of the policy.
The purpose of retrenchment cover is to protect the consumer and the credit provider when the consumer loses a job and cannot pay a debt.
The cover usually services the loan for a certain period of time while you look for new employment – it does not pay off the loan in full.
Insurers exclude covering certain situations that are set out in the policy documents – these exclusions usually include resignation, retirement, voluntary retrenchment or misconduct.
If you have many loans and may struggle to meet the monthly payments, you must carefully consider the offer of voluntary retrenchment and whether the package offered is enough to cover your monthly loan repayments.