Credit cards have been a go-to payment option for many as they enable you to spend now and repay later. Also, the additional benefits in the form of reward points, offers, smooth mobile app etc., make the whole experience richer and increases their appeal even more.
Table of contents:
- What is credit card insurance?
- How does a credit card insurance plan work?
- Types of insurance covers available with credit cards
- Credit card insurance benefits
- Things to know when claiming credit card insurance
- Conclusion
What is credit card insurance?
Credit card insurance is a unique financial feature that safeguards your financial interests from credit card liabilities. Depending on the type of insurance plan, it can protect you from unauthorised credit card usage, fraud, and emergency expenses during travel.
Certain credit cards offer integrated insurance coverage, including accident protection and travel insurance. Before making a decision, familiarise yourself with the available insurance plans to determine which ones are included with your card.
How does a credit card insurance plan work?
An insurance plan for credit cards works like any other insurance policy. Here, in case an emergency arrives, you will get financial support as per the terms of the plan you have agreed to.
Like any other insurance policy, you have to file for the claim, and then you will receive the required financial support.
Types of insurance covers available with credit cards
Now, let’s discuss the types of credit card insurance plans available in the market –
Credit card insurance cover on purchases
You can opt for this insurance plan for every item purchased with your credit card. It is nothing but purchase protection coverage. This can be claimed in case of any damage to the said product or if it is lost or stolen. The tenure of coverage and other details are insurance provider-specific, so review them before buying. This insurance plan is ideal if you are planning to purchase something expensive using your credit card.
This insurance coverage comes in handy when you book your flight ticket using your credit card and any mishap occurs. In such unfortunate incidents, the insurance company will pay the nominee the amount specified in the policy.
Many credit card issuers have partnered up with health companies. As a result, co-branded cards have come into existence that offer several health benefits like consultations, annual check-ups, and many more. You can also avail of a credit card overseas medical insurance.
Credit card theft/misplacement insurance
In case of any credit card misplacement or theft, the cardholder can claim for any fraud or unauthorised transactions made with their card. This type of credit card insurance is convenient, considering the increasing fraud and scams.
Credit card insurance benefits
There are various advantages of credit card insurance; here are the prominent ones –
- Insurance plans for credit cards cover travel expenses, accidents, roadside assistance, etc.
- These insurance plans protect you from online scams and fraud.
- Credit card insurance plans can cover any medical expenses, which are known to be expensive most of the time.
- A credit card purchase protection plan saves your financial investment if you damage or lose what you have purchased.
- These plans can also cover the default in payments due to loss of income or permanent disabilities.
- Credit card insurance plans also cover deaths from accidents.
ALSO READ: How to Pay Insurance Premium Through Credit Cards?
Things to know when claiming credit card insurance
There are some things to know before submitting the claim for an insurance plan for credit cards. These are listed below:
- The first thing you need to know is the type of claim. Whether a cashless facility or a reimbursem*nt one, you must figure out and file a claim accordingly.
- Keeping the policy details handy always helps, especially if you are travelling. It enables you to file a claim without any mistakes.
- Attaching the proper papers with your credit card insurance plan while filing the claim is essential. It reduces the chances of claim rejection or delays.
Conclusion
Considering what credit card insurance brings, it makes more sense than ever. Enquire about the specifics of insurance coverage on your card by connecting with your card issuer.
**Disclaimer: The information provided in this webpage does not, and is not intended to, constitute any kind of advice; instead, all the information available here is for general informational purposes only. FPL Technologies Private Limited and the author shall not be responsible for any direct/indirect/damages/loss incurred by the reader for making any decision based on the contents and information. Please consult your advisor before making any decision.
FAQs
Credit card insurance is a unique financial feature that safeguards your financial interests from credit card liabilities. Depending on the type of insurance plan, it can protect you from unauthorised credit card usage, fraud, and emergency expenses during travel.
How does credit card insurance work? ›
With Credit Card Protection Insurance, the policy simply covers the minimum payment on your credit card. Another option is self-insurance. By putting money away in an account of your own, you can ensure that you'll have funds to draw from to make your credit card payments if you become unemployed or disabled.
What is credit insurance and how does it work? ›
You pay the premium, and if you lose your job, become unable to work due to a disability or die, the insurance protects the lender by making payments on your behalf. Credit insurance may help you sleep at night, but the cost can be high for little payout.
What is the benefit of credit card insurance? ›
Credit card payment protection insurance provides you with peace of mind as well as financial assistance should the unexpected occur. It must be noted that in order to cover your expenses for credit card, you have to buy either a Best Insurance Payment Protection Policy or Income Protection Policy.
What is a credit card and its benefits? ›
It enables customers to make purchase transactions on goods and services. The credit card limit is determined by the credit card issuer based on factors such as income and credit score, which also decides the credit limit. Bonus tip: use the free credit score checker tool to check your current score.
How to benefit from credit card insurance? ›
Credit card balance insurance benefits apply to the amount you owed on your card at the date of loss. This means the date of death, unemployment, total disability, or your critical illness diagnosis. Credit card balance insurance benefits won't cover purchases you make on your credit card after the date of loss.
How much does credit insurance cost? ›
Your credit insurance premium is based on a percentage of your sales, conservatively around 0.25 cents on the dollar.
What is the most common type of credit insurance? ›
The most common types of credit insurance are: Credit life insurance: This coverage repays some or all of your loan if you die. Credit disability insurance: This policy will pay if you can't work due to an illness or injury.
How long does credit insurance last? ›
A contract for credit life insurance is for a specific loan, and while it does pay out in the event of the policyholder's death, the payout can only be used to satisfy the loan. Additionally, the agreement only lasts for the life of the loan.
What are the disadvantages of credit life insurance? ›
Disadvantages of Credit Life Insurance
Credit life insurance also lacks flexibility for the death payout. A payout goes directly to the lender. Since your family doesn't receive the money, they don't have the option to use the funds for other purposes that might be more urgent.
The benefit of insuring your credit card balance is that if job loss, total disability, or loss of life occurs, your finances may be protected to a greater degree. Credit card balance protection insurance can help you make payments on your credit card if you, for example, lose your job.
What type of insurance is benefits in a card? ›
You will soon get a Medi-Cal identification card called a Benefits Identification Card, or BIC. It is white with blue writing, and it has a picture of the seal of the State of California.
How long is credit card insurance? ›
There's usually no minimum spend required for a debit card or credit card purchase to be covered by chargeback, but there are time limits. You'll typically have 120 days from the date of the transaction to contact your bank to make a claim.
How to find credit card benefits? ›
Credit card issuers typically send a summary of credit card benefits shortly after account opening. If you've misplaced yours, you can typically find a summary of your card benefits on your credit card issuer's website. You may need to log in to access the benefits for your specific credit card.
What are 5 disadvantages of a credit card? ›
Disadvantages of Credit Cards
- Minimum due trap. The biggest con of a credit card is the minimum due amount that is displayed at the top of a bill statement. ...
- Hidden costs. ...
- Easy to overuse. ...
- High interest rate. ...
- Credit card fraud.
When a person draws cash on a Credit Card, it attracts a fee which is called the Credit Card Cash Advance Fee. This fee, which is a percentage of the amount withdrawn, will appear in the next billing statement, along with the entire amount withdrawn and interest levied on the withdrawn amount.
Will credit card companies reimburse you for lost items? ›
A credit card's purchase protection typically covers theft and damage to a tangible item within a specific time frame from when you purchased the item. For an item to qualify for purchase protection, you must buy it with the credit card that you plan on filing a claim under.
Is payment protection insurance worth it? ›
Not only can it help you keep making your mortgage, auto or personal loan payment while experiencing a significant illness, loan protection insurance also protects your credit score while you go through these devastating experiences as well.
Does paying insurance raise your credit score? ›
The short answer is no. There is no direct affect between car insurance and your credit, paying your insurance bill late or not at all could lead to debt collection reports. Debt collection reports do appear on your credit report (often for 7-10 years) and can be read by future lenders.
