If you look into taking out credit card insurance with an independent provider you can make huge savings on the premiums. A policy can be taken to insure a percentage of the monthly outstanding balance on the card against the chance that you could lose your income as the result of suffering an accident or an illness or if you become unemployed by redundancy. If you were unfortunate enough to suffer these events you would be able to make a claim on the cover and receive a tax-free income each month.

The income you received back from the credit card insurance policy would then be used towards maintaining your credit card repayment when the bill came into the home. You would not be struggling to find the much needed money or have the worry of falling behind on the repayments. If you were to take out a policy with ethical payment protection specialist British Insurance you would get cover than came with no excess as it would be dated back to the first day of your unemployment or from you being incapacitated. British Insurance would payout on the protection from the 30th day and would continue providing for up to 12 months.

If you shopped around and checked the terms and conditions that other payment protection specialists offered you would have to read the small print as some providers might state that you cannot make a claim on the protection for at least 90 days. You also have to find out how long you would be able to receive benefit as with some providers it could be 24 months before the protection would expire. All providers add in some exclusions, ethical British Insurance will add in just a few exclusions and they provide you with the information needed so you are able to check them against your circumstances. It is imperative that you do check them if you want to ensure that you would be eligible to make a claim.

Credit card insurance is a far better safety net to rely on than savings. You would not know how long you might have to turn to savings for as it could take many months to find work or make a recovery. If you did not have an income coming in savings would soon deplete as you would have to use them for other payments too which means you would be under a great deal of pressure to find work or to make a recovery fast. If you were to rely on being able to claim benefits from the State then you could also be let down as the little money you might be eligible to claim could fall far short of the income you are used to relying on.

Credit card insurance provides repayment security for any credit cards if you become a victim of redundancy or incapacity. If you were to suffer one of the events then you would have a struggle on your hands to be able to maintain even the minimum repayment for your credit card. If this happens and you continue to fall into debt then you would be unable to use your card and have to face the consequences of debt which could mean a court appearance.

You could take out credit card insurance with a standalone protection provider and be able to choose the percentage of the monthly outstanding balance that you wanted to insure. This sum would be agreed by your provider and is the income that you get back in tax free payments each month if you were to suffer from incapacity or redundancy. You could claim on the insurance once you have been redundant or unable to work for a period of time and this would depend on the provider as would how long your income lasted. Some will allow a claim to be put in once the 30th day of incapacity or redundancy has been reached and with others it can be as long as day 90 before you can claim. Providers might continue supplying your income over 12 months and with others you might enjoy 24 months of payments. After this period of time has been reached your income would then cease.

Thought would have to be given as to how you would manage your credit card repayments for 90 days if you had to wait for this long and consider whether you would feel more secure if you could claim on your income after the 30th day. You would also have to take into account that a policy lasting for 24 months would cost more than one providing 12 monthly payments and 12 months could be longer than needed to find work or recover.

When you take out credit card insurance with a standalone provider you could decide on what you want protection against. You
might want the security of a policy for redundancy and incapacity together but you could tailor this to suit your needs by taking a policy solely for unemployment or just for incapacity if this suited your circumstances better. This would mean you are only paying out for cover that you actually want as the events protected against go towards the cost of the insurance. Your age is another factor that is taken into account which means the younger borrower can make the most savings.

If you have security of credit card insurance to fall back onto then you would not have to worry where to get a substantial sum of money each month to pay off the outstanding balance on your card. While on work maintaining your credit card outgoings might be easy. However should you fall ill, suffer from an accident or become redundant then where would you find the money to meet your repayment if you did not have insurance behind you?

To take out credit card insurance you would have to choose a provider and compare the quotes for the cost of a policy. The quotes for the premiums would be based on several factors. One of these is the percentage of your monthly outstanding balance that you chose to insure. This is the sum of money that would be paid back to you each month, tax free, if you should need to claim on your policy and which would go towards you being able to pay your balance. You would have to check to find out when a claim could be made on the insurance policy as with some providers it is 30 days and with others it could be as long as the 90th day before you could make your claim. 90 days can be a long time to wait before seeing any benefit as you would have your lender sending out letters reminding you of the missed payments. Once you have claimed you would be able to do so for either 12 months or 24 months depending on your provider. After this period of time your benefit would cease whether you had got back to work or found work. A policy paying over 24 months would cost more in premiums than one supplying 12 months of protection.

You could choose what events you wanted to take credit card insurance for. Of course protection is available for unemployment and incapacity in one, in which case a claim can be made against either event, if needed. You might just need cover for your credit card repayments against redundancy alone or incapacity alone and with an independent provider you can. Also check the terms to find out if your chosen provider would pay out carer cover. If your policy includes carer cover you would be able to take care of a family member if they became incapacitated without having to worry where you would get an income from each month to maintain your credit card balance. Any ethical provider should supply you with this information before you take out your policy so you can be sure of what you are getting for your money and to check suitability.

When you took on the credit card did the lender ask you if you wanted to cover the monthly balance against the chance that you could lose your income? They more than likely did, however they would probably not have told you that you could choose to shop around for the policy with an independent provider. This is due to the fact that the make huge profits from adding in the protection as you pay interest on the protection. If you shopped around you could compare the cost of insurance and have more choice over your cover.

For instance you can choose the percentage of the monthly outstanding balance that you want protection for. This amount would then be given back to you each month if you needed to make a claim on the insurance due to becoming unemployed through no fault of your own or if you became a victim of illness or an accident. The amount you choose therefore would have to be agreed with by the provider as all will set a maximum amount that you are able to insure against. This sum of money which is paid tax free would be claimed for a period of either 12 months or 24 months depending on the provider, after waiting for a deferment period to pass which is generally within the 30 to 90 day region. Once the credit card insurance policy has reached its term it would then cease but this could be plenty of time for you to have searched for and found work or to have recovered from incapacity.

The income supplied from your payment protection would go a long way towards you being able to maintain your credit card bill when it dropped through the letterbox. If you keep adding to your credit card balance and should become unable to even pay the minimum amount the lender wants each month then you would have to face the consequences. The first of these would be the drastic effect it would have on your credit rating. As this is essential if you want to take any form of credit in the future you could struggle for some time to come in being able to get credit.

Another advantage to taking out credit card insurance with the standalone provider is that you would be able to choose the events that you want to take out protection for. Unemployment and incapacity protection can be taken out together. If this is the case you would have the luxury of being able to claim if you suffered from either of these events. However you could just take protection to safeguard against the possibility of losing your income to incapacity alone. If your circumstance meant you only needed to protect against the possibility of losing your income to redundancy you could also just choose to insure against this.

Credit card insurance gives security for a percentage of the monthly outstanding balance of your card. Depending on how you choose to use your card the balance of your card could be substantial at the end of each month. Many individuals use their card instead of cash on a daily basis, while others use it solely for expensive items and the unexpected outgoings that have to be met often at short notice. However you choose to use your card you could benefit from taking out protection against the possibilities that you might lose your income to unemployment or incapacity.

When you take the card out with the lender they might try to get you to cover your monthly outstanding balance. However you have to be aware that if you take this option the lender will add protection in with the card and usually this means you will be paying interest on the protection. However you do have another choice if you want to protect a percentage of your monthly outstanding on your credit card and this is taking cover that is offered by an independent provider. An independent provider will allow you to pay monthly premiums for the protection which will be based on age when you apply, the level of cover you choose and the percentage of your monthly outstanding balance. The percentage you choose to protect is the amount you would receive back each month once the deferment period has passed. The provider would usually payout from between the 30th and the 90th day. Once you have begun to receive payments you would continue to benefit for a period of either 12 months or 24 so checking this out is essential. Some providers will also backdate the protection to the first day that you became unemployed or incapacitated so also check this before taking on the policy.

Another benefit to taking your credit card insurance with the standalone provider is that you can choose to protect just for the events needed. While you can choose unemployment and incapacity protection together you could tailor the policy to suit your needs. You might want to protect just against the possibility of unemployment or you could choose to insure solely against the chance of falling a victim to incapacity.

With credit card insurance behind you there would be less worry about where you would get the bulk of your outstanding balance each month as the policy would provide it. This would allow you peace of mind and security which could allow you to concentrate on making a recovery from your accident or illness or gives you the space needed to search for work and secure another position.

If you were relying on using your savings to see you through unemployment or incapacity you could deplete then before recovering or finding work. You might also be let down by State benefits, when you take this into account a policy could be a more viable form of protection.

Credit card insurance could help you to manage and get through your unemployment or incapacity a great deal easier at least when it came to your credit card repayments. If you were to suffer from either of these events you could be in for a huge struggle when it came to meeting your monthly credit card bill if you had nothing to fall back onto. If you are in huge debt with your credit card then the lender could take court proceedings against you and you could have bailiffs coming into your home to seize belongings to sell. In all cases of credit card debt you would earn a bad mark against your name and this would affect any future borrowing as your credit rating is what all lenders take into account.

You could take out credit card insurance with an independent provider and this would be one of the cheapest ways of taking out the valuable protection. By shopping around and comparing the cost of credit cover you could make some huge savings and get the information you need to determine if a policy would be suitable for your circumstances. You would insure a percentage of the monthly balance that is outstanding on your credit card and the provider you choose would pre-agree to this sum of money. If you then were unlucky enough to have to claim on the insurance due to unemployment or incapacity this would be the income you receive back as a tax free payment. You receive payments each month for either 12 or 24 months after waiting for between 30 and 90 days to claim, which means you would not be left struggling to find the whole sum.

Usually in the majority of cases the lender will have tried to get you to take out insurance for your credit card repayments when you took out the card. However the cost of insurance this way will be a great deal more than if you had shopped around with an independent provider. Another downfall of taking your cover with the lender is often the lack of information given at the time of selling. In some cases in the past this has led to many taking out protection that they could not hope to make a claim against due to the exclusions which have to be checked against your lifestyle. In the future there will be changes relating to the way that protection is sold. Lenders will not be able to sell their cover alongside their credit agreements. Instead they would have to wait for a period of 7 days before then contacting the consumer and asking if they want protection. They would also have to make the consumer aware that they can choose to take out the policy independently by shopping around.

In the past, your flexible friend used to be your credit card, but no it’s more likely to be your credit card insurance.

Credit card insurance is a comprehensive package of unemployment, accident and sickness cover that guarantees to pay a percentage of your credit card bill every month if you lose your job or are unable to work.

Not to be confused with credit card protection, that deals with replacing lost or stolen cards, credit card insurance is a cheap, cost effective product with lots of benefits.

If your cards are covered by credit card insurance you don’t have to worry about making the monthly payments if:

• You lose your job through no fault of your own
• Cannot work due to ill-health
• Cannot work after being injured in an accident.

You may think none of these things may ever happen to you – but statistically you would be wrong.

According to the Royal Society of Prevention of Accidents (RoSPA), almost three million people are injured at home, work and on the roads every year. Of course, not all those people have to take time off work, but the figures give you some idea of the likelihood of becoming an accident statistic.

Likewise, unemployment is rising as more and more businesses feel the impact of recession.

If you had an accident or lost your job tomorrow, you need to have a plan on how to cover your bills – including your credit card repayments.

That’s why credit card insurance is your flexible friend, because the package protects you from common risks and offers financial support in a time of crisis.

At the end of the day, credit card cover is insurance and not a universal solution to all your ills. Part of the deal is exclusions and conditions.

For instance, you are only covered for unemployment if you are made redundant or lose your job through no fault of your own.

The accident and sickness cover won’t pay out for pregnancy, back ache, stress or any condition that you were suffering at the time of application for credit card insurance.

Before signing on the dotted line, you might want to shop around to see if you can find cover that suits your circumstances. This may be a little more expensive, but what’s the point in paying out for cheap cover that doesn’t offer you the features and benefits you need?

If you have a partner who also has credit cards, it makes sense to look at two separate policies. Obviously if the partner holds a card on your account, it’s the account that’s insured not the number of cards.

So how does you flexible credit card insurance look after you? If an event triggers a claim, like redundancy, the insurer will pay an agreed monthly percentage of your credit card balance for you.

Don’t get me wrong, credit card insurance is a very useful form of payment protection and the more credit cards you have the more you may need it. There are some very good benefits as well, but when selecting your policy you should be cautious about how and where to take out your policy.

Before we go deeper into that, let’s look at the benefits the policy provides.
Firstly the policy will pay out a tax free benefit for about 12 to 24 months depending on the provider you choose. This payment will go toward your credit card balance but it will not cover the entire monthly balance. Providers normally stipulate a percentage that will be paid each month.

The policy caters for people who have lost part or all of their income due to involuntary redundancy, sickness or accident. If you don’t have adequate statutory sick pay or access to state benefits then this may be the only recourse available to you.

Having credit card insurance will take away all the stress and worry you might face when thinking about keeping up your card payments while you have little or no income coming in. There will be no missed payments which could lead to a poor credit history which in turn could make it harder for you to access low interest credit in the future. The peace of mind and financial benefit you receive is totally worth it.

Reason For Caution
The reason for caution is not directly linked to the policy but rather the providers who offer them. Some providers do not take the time to explain how the policy works and many consumers are then stuck with a policy they cannot claim on.

To avoid falling into this trap, be sure to read your terms and conditions carefully and match them against your own circumstance to make sure you will be covered.

Other companies try to sell consumers their protection product on the back of a credit card sale.

Simon Burgess, Managing Director of British Insurance, an independent UK protection company comments ‘The practice of selling protection products on top of a credit card sale takes away the consumers option to explore the market. It may be easier to sign up for the provider’s product but it may be a very expensive product. If the consumer takes the time to evaluate other options they will find that there are huge savings available’.

The Competition Commission seems to agree with Simon Burgess as they are now trying to make it illegal for a provider to sell a protection product to a consumer within 14 days of a credit sale. This will give the consumer the chance to see what else is available on the market.
Summary
So as you can see credit card insurance is very useful, after all it provides much needed financial help when you have limited to no income. But if you are not careful about when or how you shop for the policy you could end up with a very bad experience.

Although not everyone will use it particularly regularly, a credit card is present in most people’s purses and wallets. Even if someone does not use it now, there may come a time in future when they have to. Unexpected car repairs and big purchases can mean someone has to turn to buying on credit, and this means taking on a debt which incurs interest. With all the planning in the world, unforeseen circumstances can sometimes mean someone is unable to keep up with repayments. Credit card insurance cover can ensure that someone can still keep up even if they lose an income through no fault of their own.

A salary is how most people manage to keep up with bills and other financial commitments. Should it suddenly be lost due to illness, accident and injury, or involuntary redundancy, many people would soon find themselves in trouble. Few of us have enough savings to last for very long, and not everyone is lucky enough to be able to rely on partners or relatives to bail them out.

Credit card insurance is normally associated with fraud and crime, but it can also protect someone’s ability to keep up with the regular payments. Even one later month can rack up the interest and incur extra fees, and over time it can affect someone’s credit rating. So if someone ended up without cash for a long period through no fault of their own, they would soon start to struggle and may face being pursued by the card company.

This would be added stress on top of the possibility of recovering from a serious illness or accident. Someone may also be made involuntarily redundant and have to go and look for a job. In the meantime their debts could be left hanging over them, but credit card insurance can help make sure at least the plastic is kept in hand.

This type of policy will normally pay out a set percentage of what is outstanding on the balance. So someone takes out a policy protecting 10 per cent, their first payment on a balance of £1,000 would be £400. Subject to a successful claim, the insurance company simply pays the bill off gradually on your behalf, although if someone returns to work this will obviously stop. Payments can continue for set periods, and 12 months is a typical option after a successful claim.

Premiums are often calculated according to the level of debt, and a percentage is often used as a calculator. So someone with a policy involving a seven per cent fee would pay £7 on a card balance of £100 for protection for that month.

Credit card insurance can of course only be claimed if you are out of work through no fault of your own, but it provides a lifeline for those who fall on hard times. and can help take away some of the anxiety associated with being out of work. Although cover is available from all of the usual suspects including high street insurance companies and banks, the likes of independent specialists British Insurance can often supply policies cheaper than the big players.

Credit card insurance could ensure that you are able to continue repaying your monthly bill if you lose your own income through unemployment or incapacity. You could take out a policy with an independent payment protection provider and this would be one of the cheapest ways of taking a policy. High street lenders charge high premiums for cover which brings them in £4 billion in premiums per year when adding the cover alongside their loans and credit cards. Cover can be taken by protecting a percentage of the monthly balance outstanding on the card and this would be pre-agreed by the provider. This amount would then be paid back to you if you were to claim due to suffering an accident or illness or if you are made redundant.

There would be a deferment period set by the provider and this would depend on who you chose to take out protection with. For instance if you chose to take credit card insurance with ethical specialist British Insurance you could make a claim on the insurance once the 30th day has passed. You then receive a payment each month for up to a maximum of 12 months and then the policy ceases. This can be more than enough time for you to have made a recovery and got back to work or for you to have searched around and found another job. You would not have to worry about where to get the majority of the money to continue meeting your payments which would bring a certain amount of relief.

If you search on the internet and compare credit card insurance you will ensure you get the best possible deal, although one of the most competitive quotes will be with British Insurance. If checking the cover other providers offer you would have to pay attention to the small print as there are some providers that might offer a 24 month policy. You would also have to check the terms to find out how long you need to wait as some providers offer cover that comes with a deferment period of 90 days. All protection will come with exclusions and these would need to be checked against your current lifestyle. Ethical British Insurance add in just the most frequently found exclusions but others might include many more.

Credit card insurance would provide peace of mind at least for the term of the cover. You would not have to worry about making great changes to your lifestyle in order to be able to cover the repayments each month of your credit card. You would also not have to juggle your credit card bill around with the hope of being able to meet it before receiving a red letter from the lender.