Archive for the ‘Credit Card Insurance’ Category
Your credit card company may use different names to refer to credit card insurance: “payment protection”; “credit shield”; “credit card protection insurance”; “credit safeguard”. It’s important to check what kind of coverage is implied in your insurance plan since it varies from company to company. Here are a few things that may get covered by credit card insurance policy:
Credit Life Insurance will pay off your credit card balance if you die. The one necessary condition is you need to make the credit card company the beneficiary on your insurance policy.
Credit Disability Insurance offers coverage of minimum payments on your credit card if you are unable to make them due to a temporary disability. The coverage is only valid for a specified period of time.
Credit Unemployment Insurance will pay minimum amount on your card every month if you incur involuntary unemployment (for example you were laid off due to downsizing of your firm).
Credit Property Insurance will pay for damaged or lost items that you purchased using your credit card.
Credit Liability Insurance offers protection against your liability if your credit card got stolen or misused.
It may sound good and provide some peace of mind, however enrolling in a credit card protection plan is frequently an unnecessary expense. Credit card insurance policy is costly and rarely pays off. Thus, even if your card gets stolen, by law your liability is limited to just $50, which most credit card companies won’t even bother to collect from you. Credit Life Insurance will relieve your family members from the obligation to pay off your credit card debt in case of your death, however it’s usually limited to a certain amount ($5,000 to $20,000), so it doesn’t provide full protection. The limitation of Credit Disability Insurance is pretty obvious: it will only cover your minimum monthly payments for a specified period of time. Yet even with a high balance on a credit card, many people with short-term medical disability are still able to make minimum monthly payments using their savings.  Most financial advisers agree that purchasing credit card insurance is a poor investment and barely ever pays off, so it should be avoided all together.
