If you hear the term ‘credit card insurance’ you may automatically think of the policy widely available that protects you and your card in the event that it is lost or stolen. However, there is another type of protection available that is associated with your credit card – credit card payment protection insurance.
The type of credit card insurance we are talking about here if one that will help you maintain your monthly repayments in the event that you lose your income through no fault of your own. To define losing your income this way, this could be where you are involuntarily made redundant, or you suffer from an illness or have an accident that prevents you from working for some time.
In the event that this happens, the credit card insurance will start to pay you a monthly tax free benefit that will help towards your monthly credit card commitment.
How long will it pay out for?
Typically, the policy will run for 12 to 24 months, subject to the individual policy terms and conditions, or until you are back at work. This should give you enough time to find another job or to recover and get well. At least with your credit card repayments being met at such a stressful time, it will be one less thing to worry about.
How much will you get?
With most credit card insurance plans you can insure a percentage of the outstanding balance of your card, so you can choose how much cover you will need, subject to the provider’s limits of course.
When will it start to pay out?
Your credit card payment protection insurance plan will start to pay you a monthly amount from thirty to ninety days after the first day of incapacity or unemployment. If you go with standalone provider British Insurance, for example, you can make a claim after thirty days and you will be paid back to day one of your unemployment or illness, meaning you can take full advantage of the cover. Some providers will make you wait three months before you can make a claim, meaning that you could be racking up debt in that time.
Where to buy it?
You would have been offered credit card cover when you took out your borrowing. However this is often an expensive way to protect your monthly repayments as the traditional banks and high street providers have been known to charge more than they need to for this protection.
The good news is that you can shop around for your credit card insurance cover and by going independently, you can get a low cost solution to protecting your credit card commitments.
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