Yalu Financial Services, which is backed by Old Mutual Alternative Risk Transfer Limited (OMART), allows consumers to consolidate their credit life insurance, thereby reducing monthly costs.
Credit card holders are frequently unaware that they can reduce the cost of credit life insurance, which can cover any outstanding unpaid balance in the event that they pass away, are retrenched or become disabled.
“Most people who sign up for credit life insurance take the default product, supplied by the same institution that has provided the credit card,” says Tlalane Ntuli, co-founder and Chief Operating Officer at Yalu. “They are oblivious to the fact that they can actually choose a credit life insurance policy, and that this choice has major implications in terms of monthly payments.”
In most cases, credit life insurance premiums do not reduce as the credit card balance reduces. Most financial institutions also generally charge flat fees for every rand borrowed, regardless of the amount. As a result, consumers unwittingly pay the maximum amount for their credit life insurance.
“Improving awareness about credit life insurance options and fees is just not in a bank’s commercial interests,” says Ntuli. “The status quo is very profitable, and so consumers have, until very recently, had very few options in making an active choice that reduces their monthly costs.”
According to Ntuli, Yalu has changed the status quo with its online experience that allows consumers to work with a single, optimised premium, instead of paying high rates across different loans and credit cards. The offering, which was originally only for personal loans, was expanded to cover credit cards, student loans and revolving loans. Despite resistance from banks, Yalu believes it has offered crucial monthly relief to affected consumers.
For more information, visit www.yalu.co.za