This is because most South Africans do not have enough money saved to pay one months worth of expenses and if there are no savings, liquid assets need to be sold. After three months of non-payment, banks generally investigate why people are not keeping up their monthly payments and gauge whether the bank can accommodate them. If not, foreclosure proceedings might be initiated.
Illness and disability affect a large part of the country's population. According to the Medical Research Council (MRC) 6% of South Africans are disabled and our annual death rate rose by 66% in the past six years from 272 000 in 1998 to 457 000 in 2003. Added to this, almost 40% of South Africans are unemployed.
In 2003 Absa repossessed 300 homes as a result of the inability of heirs to pay outstanding home loans balances. With this in mind, Mortgage SA has designed a product - Mortgage SA Mortgage Protection Insurance - with Hollard Insurance. It offers cover in the event of death, disability or retrenchment that extends to cover the full outstanding home loan balance in the event of death or permanent disablement.