Multiple cessions can now be accommodated by banks and insurers on a single life insurance policy. This means that when an insurance policy is sufficient to guarantee multiple credit facilities obtained by the policyholder, it is no longer necessary to transfer the entire value of the policy to a single credit provider.
This is according to a joint statement issued by the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa).
The statement elaborated that the policyholder may choose to assign only a portion of the policy cover necessary to obtain the credit facility. This leaves the remainder of the policy to be transferred to other credit providers, or left as is. This measure can also be applied to existing policies.
“We are confident that this will benefit the individual, and save money on acquiring separate life insurance policies to serve as collateral for various credit facilities offered by credit lenders. As a result, banks and other lenders no longer require the physical original policy document to be handed over to the financial institution for the duration of the loan.
The measure goes into effect immediately,” the statement reads.
BoN and Namfisa also expressed their appreciation for the willingness and commitment of Namibian banking institutions and registered insurers to implement multiple cessions of a single life insurance
policy.