Credit Card Protection Insurance

Introduction

Virtually every adult has at least one credit card. In fact, the average adult has several credit card accounts.

In addition to most men and women maintaining credit card accounts, in this day and age most of these accounts carry a balance on them from month to month. In point of fact, statistics indicate that the average amount of money that most households have outstanding on credit cards at any given time is somewhere in the neighbourhood of £15,000.

In most cases, a typical household is able to keep a fairly decent pace with its expenses, including the average of £15,000 in outstanding credit card debt. But, in this day and age, countless households find themselves living and getting by month to month.

If the breadwinner for a household or family is suddenly taken ill, incapacitated or passes on, catastrophe is the actual end result. Creditors can be found at the door in not time at all.

One way in which a person can protect his or her family against such a calamity is through the use of credit card protection insurance. In this article, the benefits of credit card protection insurance is considered and analysed.

What is Credit Card Protection Insurance?

Before taking a closer look at credit card protection insurance, a brief definition of the coverage is provided.

As with any other insurance coverage or policy, a person who takes out a credit card protection insurance policy pays a premium to the insurer. Normally, the premium associated with credit card protection insurance coverage is very low, nominal. The premiums can be paid on an annual, quarterly or monthly basis, depending on the preference of the credit card holder.

In the event of unemployment, sickness, accident, disability or death, the coverage afforded by the credit card protection insurance policy kicks in. The policy will make monthly credit card payments during the period of illness, disability or unemployment. In the case of death, the policy generally will satisfy the balance due on the account.

This valuable payment protection is available from most credit card companies, however like any insurance it pays to read the small print because credit card insurance terms and conditions vary from one credit card company to the next. Important things to look out for include the way cost of cover is calculated e.g. normally between 70 pence to 90 pence of the statement

Variations in Coverage

One important factor that must be kept in mind when a person is considering credit card protection insurance is variations in coverage from one policy to another. In other words, when it comes to credit card protection insurance, it is vital to read the fine print.

When it comes to this type of coverage, there seems to be an assumption on the part of many, many consumers that the coverage automatically will pay on the credit card during the entire period the card holder is unable to work. However, in many instances, this is not the case.

Consequently, and has been mentioned, it is vital to compare and contrast what is being offered in one or another credit card protection insurance policies.

Carefully Review Exclusions

Many credit card protection insurance policies have a number of specific coverage exclusions attached to the policies. For example, in the case of unemployment, coverage may be excluded for a period of time. In other words, a person will need to be unemployed for a period of time before he or she will qualify for coverage under the terms and condition of the policy in question.

Additionally, many polices have what we will call a waiting period after the policy takes effect before coverage will be extended.

Disability and Illness

One of the reasons a person should consider credit card protection insurance coverage is to ensure that credit card bills will be satisfied during a period of disability or extended illness.

Many credit card companies or providers offer this type of insurance directly to their card holders. Additionally, there are a number of insurance companies that provide this type of coverage to a general pool of consumers.

Unemployment

Coverage for unemployment under a credit card protection insurance policy has been discussed previously in this article. However, this also represents one of the primary reasons in which a person might want to consider such coverage.

Death

The vast majority of credit card protection insurance policies provide for a lump sum payment upon death that will pay off the outstanding balance due and owing on a credit card.

Conclusion

When opening a credit card account, it is wise to consider companion credit card protection insurance coverage. As with any other financial product, it is important for a consumer to do his or her research prior to enrolling in any credit card protection insurance plan.