| 1) |
If a party to a contract in terms of which money is loaned, goods are leased or credit is granted, requires, whether as a condition thereof or otherwise, that a long-term policy or its policy benefits be made available and used for the purpose of protecting the interests of a creditor, the person who is so required to make that policy or those policy benefits available shall be entitled, and shall be given prior written notification of that entitlement, to a free choice— |
| a) |
as to whether he or she wishes to enter into a new policy and make it available for that purpose, or wishes to make available an existing policy of the appropriate value for that purpose, or wishes to utilise a combination of those options; and |
| b) |
if a new policy is to be entered into— |
| i) |
as to the long-term insurer with which the policy is entered into and as to the intermediary (if any) who is to render services contemplated in section 49 in connection with the transaction; |
| ii) |
as to whether or not the policy benefits concerned are to be provided in an event other than the death or disability of the life insured; and |
| iii) |
as to whether or not the value of the policy benefits to be provided thereunder, when taken in the aggregate with the value of the policy benefits provided under any other policy which is also to be made available and used for that purpose, shall exceed the value of that debt or other obligation; and |
| c) |
if an existing policy is to be made available— |
| i) |
as to the intermediary (if any) who is to render services contemplated in section 49 in connection with the transaction; and |
| ii) |
as to whether or not a variation of the policy required for that purpose shall be such as to cause— |
| aa) |
policy benefits to be provided in an event other than the death or disability of the life insured; or |
| bb) |
the value of the policy benefits to be provided thereunder, when taken in the aggregate with the value of the policy benefits provided under any other policy which is also to be made available and used for that purpose, to exceed the value of that debt or other obligation. |
| 2) |
The provisions of subsection (1) shall be deemed not to have been complied with unless the policyholder whose policy is to be made available has confirmed in writing, before the policy is used for the purpose of securing the debt concerned or other obligation, that he or she— |
| a) |
was given prior written notification of his or her entitlement to the freedom of choice referred to in that subsection; |
| b) |
exercised that freedom of choice; and |
| c) |
was not subject to any coercion or inducement as to the manner in which he or she exercised that freedom of choice. |
| 3) |
If the provisions of subsection (1) are not complied with, the security provided by the policy made available and used for the purpose shall be void and the policy benefits shall be provided to the person who made it available. |
| 4) |
Subsection (1) shall not apply to a long-term insurer if it lends money to one of its policyholders upon the security of a long-term policy issued by itself. |
| 5) |
This section does not apply if the long-term policy or its policy benefits as contemplated in subsection (1), is made available for the purpose of protecting the interests of a credit under a credit agreement to which the National Credit Act, 2005, applies. |
[Section 44(5) inserted by section 172(2) of Act No. 34 of 2005]
Public Service Commission Act, 1997
