How to Protect Credit Cards with Insurance

There is an old saying that states, "You only need insurance when you need it." This basically means that while nobody likes to pay for insurance we are glad to have it when something unexpected happens.

When the unexpected does happen there are things that are easy to deal with and there are things that can turn our world upside down. It is bad when things like a fender bender happen but we can just easily fix the car.

But there are things that can happen such as losing a job or a death of a household provider that can cripple a family emotionally and financially. It is bad enough when an event like this occurs but it is worse when a family is devastated financially by the event.

But it is a good thing that there is often overlooked credit insurance that has the ability to protect the financial security of a family when an unexpected event happens. If you want to make the threat of unemployment, disability, or death minimal then credit insurance can be a good option.

This type of insurance, that is optional, will protect your debt repayments if you are unable to work because of an accident or sickness, lose your job when it is not your fault, suffer disability of a permanent nature, or pass away. It comes with every credit card offer you see.

It is not surprising that there is a huge market for credit protection insurance since more than 205 million people in the USA have a credit card, automobile loan, or student loan. This according to Credit Factor, which is a national agency for credit monitoring. Credit protection gives the promise to its customers that their loan payment will be guaranteed in specific situations.

There are several varieties of credit insurance such as credit life, disability, unemployment and property.

• Credit life insurance will pay of the debt that you owe if you pass away. The beneficiary of the policy you hold is the company that the outstanding debt is owed to.
• Credit disability insurance will protect the credit ranking you have by making the payments per month if you happen to become medically disabled.
• Involuntary unemployment credit insurance will pay for your monthly minimum payment if you are laid off in your job or your job is downsized. But what does this type of insurance not typically cover are purchases that are made after the date of involuntary unemployment.
• Credit property insurance is made up to cancel the debts on various things bought on credit if those items are entirely destroyed by specific incidents that are listed within the insurance policy.

Generally financial institutions that are partners with insurance companies offer coverage for credit protection. This specific type of insurance usually makes the minimum payments, which is usually 2%-3% of the balance on your personal loans, credit lines and credit cards if you become disabled or unemployed. If you pass away your account can be fully paid off.

But there are a number of exclusions that apply. As an example you cannot claim for illness of a chronic nature that is diagnosed before the date of the start of the policy.

Other exclusions include pregnancy or childbirth, surgery for cosmetic reasons or disability where the cause was on purpose or because of drug abuse. Also you cannot claim for unemployment if your job is seasonal or work at a job that has a fixed term contract that is coming to an end, for reasons of voluntary redundancy, for reasons of resignation or being fired because of misconduct, or if you do not take any other reasonable job offer from your employer.

One of the benefits of credit protection insurance is that is will give you peace of mind that payments of loans will still be made if you happen to lose your job, health, or life. The coverage is available to you for personal loans, lines of credit, bankcards, and loans for small businesses. Here are some of the ways that credit protection insurance can help you.

• Passing away - Can prevent your payout for life insurance from being swallowed by debt payments.
• Disability - Will make the payments for you until the time when you can go back to work.
• Unemployment - Will cover you payments every month while you are looking for new employment.
• Critical injury - Will fully pay your account if the injuries you sustained lead to a loss of a limb, loss of hearing or sight, or lead to other severe complications.
• Terminal medical condition - Will fully pay your account if happen to get an illness that is terminal.
• Leave of absence - Will make your payments every month if you have to take time off from your job for various reasons, such as caring for a new child, or care for a sick relative or to return to active duty in the military.
• Hospitalization - Lets you file a benefit request for payments within 2 days when you are hospitalized under the care of a doctor.

I Don't Have The Extra Cash - Should I Go For It Anyway?

It all depends on your individual situation if credit protection is worth it or not. When you make the decision you should look to see if you have enough coverage with health and disability insurance, and savings, to adequately cover you financially if something does happen to you.

Overall the biggest decision you will have to make is whether financial security and having peace of mind is worth the cost of the credit protection insurance. The cost of the coverage is typically $1 for every $100 of debt covered. It is obvious that you do not want to pay the premiums per month but if something unexpected does happen you will be glad you did.