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 cover on purchases
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.
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.
Is credit card insurance worth it? ›
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 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.
Should you take credit card insurance? ›
If you have a large amount of debt that you're working to pay down, it may not be a bad idea to have credit card protection insurance. In case of emergency, it would allow you to suspend your credit card payments for a time and prioritize debt that can't be suspended.
Why don t you need credit card insurance? ›
Given that federal law limits credit card fraud liability and that most credit cards offer a “Zero Liability” policy, credit card loss protection insurance doesn't offer any additional benefits. Not only is it unnecessary, it's also a waste of money. Why pay extra for something that's already been provided for you?
How much is insurance on a credit card? ›
Typically, the monthly cost for this type of insurance is about 99 cents (plus taxes) per $100 of your average daily credit card balance; or 59 cents per $100 of your average daily credit card balance if you're 66 years of age or older.
Who actually pays for your credit card benefits? ›
Credit card issuers technically pay for the rewards they issue. It's no small sum, either. They paid out over $40 billion in credit card rewards in 2022, according to the CFPB. But they make much more in fees than those rewards cost them.
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.
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.
Why pay credit card insurance? ›
Credit card insurance provides financial protection against various risks and liabilities associated with credit card usage, giving cardholders peace of mind knowing they're covered in case of unforeseen events.
Can I get a refund for balance protection insurance? ›
If you cancel within the first 30 days, the insurer will issue a full refund of any amount paid for the Plan to your credit card. If you cancel any time after that, the insurer will refund any amount paid for the period after the cancellation date.
What is credit card insurance for? ›
Some credit cards offer return protection coverage, so you may be able to get a refund for the purchase after all. Purchase protection: If a product you bought with the card is damaged, stolen or lost within a certain time frame (typically a few months), this coverage can reimburse you for the purchase price.
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.
Does credit insurance affect credit score? ›
No. A credit score is based on your ability to repay amounts you have borrowed. An insurance score predicts the likelihood of you becoming involved in a future accident or insurance claim — it is based on information gathered from policyholders with similar credit characteristics who have had previous claims with us.
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.
Are you insured if you pay by credit card? ›
Credit card payment protection
This means that if there's an issue with the product you've bought or the company you've bought from goes into administration, the credit card company has equal responsibility to make sure you're not left out of pocket.
How does payment protection insurance work? ›
Payment protection insurance, or PPI for short, is a type of policy designed to help consumers repay debts over a short-term, fixed period. It provides coverage for issues like accidents and illness, which is why it's often referred to as accident, sickness, and unemployment insurance.
Does credit card insurance cover loss? ›
Some cards also provide the added benefit of insurance. Upon the occurrence of an event covered by the insurance, it may partially reimburse you for eligible travel expenses, or loss or damage to car rentals or qualifying purchases.
