The Pros and Cons of Credit Card Insurance

As what we’ve been talking about, applying for an insurance policy is one of the must-do’s that you can’t just simply ignore nowadays. Almost every risk known to us have already been covered by these policies. So what’s more practical than transferring it to these companies? But just as how every rose has its own thorns, no matter how good the policy might be, there will always be a loophole.

Insurance is one of those definite deals we encounter every day. With that being said, these policies aren’t immune to the different changes that are happening to the environmental, social and economic fields. So whenever there’s a change, the policies must also foresee these changes and adjust the benefits thereafter.

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Also, these policies aren’t suited for everyone. Some of these only apply to those who are capable and have a steady income already, while the other policies only make sense to those who are really in need. Given that scenario, we will repeat what we mentioned earlier – every policy has its own loophole. But these loopholes don’t affect everyone in that sense. Confusing right?

That’s one of the problems on the policies nowadays. They are somewhat confusing. If you won’t inquire about it properly or they miss the right words in your question, then expect to receive a half-baked answer.

One of these confusing insurance deals is in the form of a credit card insurance. By the sound of it, it’s really a nice deal. The core function of this insurance is for you to be able to use your credit card for your payments in case of loss of income due to job loss or extreme illness, or pay your balance in the event of death. Well, many would take a keen interest of it. But in all honesty, this deal might not be practical for some of us. With that, we’re obliged to enlighten you about what is there in your credit card insurance.

If you do own one, chances are you’ve already been asked by the company if you would like to add an insurance for it. The problem with this is unlike other types of policies, this doesn’t involve any written agreement. Just your simple verbal agreement on the phone would suffice. So unexpectedly, you won’t notice that you’ve been paying around $80 dollars a month starting at the time you’ve said OK.

In a temporal manner, it really sounds like a nice bargain. Where would you find such deal to use your credit card in times of peril with just an $80 dollars a month policy? But wait, remember that verbal agreement we’re talking about? Yeah, that’s we’re the problem arises. You can’t really say that your current case is covered by the policy.

The thing with these policies is that it was never intended as a reward for you from the company. It’s more like their extension to cut more interest from you. Well it might give you a break in the short run, but it would actually cost you more over time.

So much with the consequences, let’s divert the topic to its benefits.

First of all, let’s think about the purpose of this policy. As mentioned above, it is intended for cases when you really need to pay for something but you just don’t have a cash at hand. But don’t get it wrong because there’s a missing piece of it. The missing piece is that you must be able to pay for it without minding what an $80 dollars would cost you a month. In short, you must apply for this one of you are rich enough or you have an extra money after you’ve scrapped the bill for the basic necessities.

Most of these insurances are in the form of the following:

  • Credit life insurance pays off the debt you owe if you die. The beneficiary of the policy has to be the company where the debt was owed from.
  • Credit disability insurance protects your credit rating by making your monthly minimum payment if you become medically disabled. Usually there is a set time period in which payments will be made and additional purchases after the disability will not be included.
  • Involuntary unemployment credit insurance will make your minimum monthly payment if you are laid-off or downsized and again, purchases after the involuntary unemployment would not be covered.
  • Credit property insurance usually will completely cancel debt on items you purchased with the credit if the items are completely destroyed by specific incidents listed in the policy and a deductible would not apply for the damages to be paid.

With that, it will really save you from the hassle of worrying on these short term concerns. It’s also a wise choice for those who have plans already and intends to use it at that time.

As a summary, credit card insurance is not applicable for those who barely earns around $200 a month. It’s pretty much obvious that this policy is intended for those who can really afford it. But don’t dismiss its benefits. You might not have to buy other insurance premiums from other things like travel insurance if these things are already covered in your credit card insurance. Be aware of your options.

I hope you enjoyed this important discussion. Feel free to copy/paste this link and email it to anybody you know that might be able to use this info.

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