Credit card insurance is a type of policy designed to make the minimum monthly payments on a card if the cardholder becomes unable to make their payments due to circumstances beyond their control. There are four types of insurance coverage for credit cards:
- Credit disability insurance- makes credit card payments if you become disabled.
- Credit involuntary unemployment insurance- makes credit card payments if you are a victim of lay-off or fired
- Credit property insurance- insurance that will pay to fix or replace items bought using the credit card
- Credit life insurance- pays off a debt in case the cardholder dies
There are steep fees associated with credit card insurance that may not make purchasing the coverage a cost effective strategy. Since many people don’t fully grasp the terms of credit card insurance they can sometimes apply for one when in fact they don’t need it. So unless you know for sure that it is necessary to get one – it is not advised.
Have you ever had credit card insurance? What do you think about it? Please share your thoughts with the Go Banking Rates community.