Credit Card Protection Insurance

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Credit Card Applications » Research » Guides » Cardholder Benefits » Credit Card Protection Insurance

Credit Card Protection Insurance


Updated: December 25, 2012

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Credit card protection insurance may be offered by your credit card issuer under a handful of different names. You might have heard of 'Credit Shield,' 'Payment Protection,' and 'Credit Safeguard' - they`re all just credit card protection.

Now, what is credit card protection? Credit card protection is insurance for your credit card. Basically, if you lose your job, become disabled, or die, it can be hard to pay your credit card bills. But if you had credit card insurance and encountered one of those aforementioned fates, then your credit card payments and interest would be suspended for up to two years. This can help you keep your credit score in good condition during a tough time.

Of course, the service doesn`t come for free. Consumers who opt for the protection have to pay a monthly fee. The fee is usually two to three percent of the balance that you hold on the card. If you think that credit card insurance is for you, here is a little bit more about it.

There are four major types of credit card protection. They are disability, life, involuntary unemployment, and property.

Disability insurance will take care of the minimum payments due for a set amount of time after a medical disability. Purchases made after the cardholder has become disabled are not included. Life insurance covers the remaining balance on your card after death, as long as the credit card company is mentioned as a recipient on the insurance.

With involuntary unemployment insurance, the credit card company agrees to pay the minimum balance on your account if you get laid off from work. Purchases made after you have become unemployed are not paid for. The final type of insurance is property insurance. Property insurance will cover items that are damaged or stolen.

Obviously, there are some pluses to having credit card protection if you run into an unfortunate situation, but many consumers complain about the payments and many never see the benefits. With the unemployment and disability credit card insurance, cardholders are only covered for the minimum monthly payment for a very short time period. Check with your credit card issuer to find out your exact terms. Other stipulations include: with the disability credit card protection you must be employed for at least 20 hours a week in order to reap the benefits of the insurance. The credit card issuer will usually only pay your minimum payment until time runs out or they reach a set price cap, which is usually between $5,000 and $20,000.

If you happen to die, the credit card company will pay off the entire balance of the credit card, which saves your family members the headache of handling your debt. In these cases, the credit card issuer may still only pay up to $20,000.

Before signing up for credit card insurance, do your research and ask pressing questions, like:

How do I cancel the policy?
How often to rates go up?
Will the insurance cover children as well?

Very rarely does credit card protection pay off, but if you feel it is a fit for you and your situation then ask your lender today.

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