Must-knows for ceding your life policy when buying a home
Many consumers who are eager to finalise the house buying process often rush into taking out and ceding life insurance without first doing their homework.
The ceding of a life policy involves legally transferring a portion of the cover amount to be used as collateral by a creditor in the event that the policy holder is unable to meet their debt obligation.
Lee Bromfield, CEO of FNB Life, says when applying for a home loan, banks may require that you take out life cover as security if you do not meet a certain salary bracket. The life cover is then ceded and used as collateral against the home loan to ensure that your loved ones or beneficiaries still have a home in the unfortunate event that you pass away.
He unpacks key factors to consider when ceding a life policy:
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