Credit card protection would provide you with money towards your credit card bill if you lost your own income. Each month you have to at least pay the minimum payment on your bill and if you have not got any money to fall back onto then you would fall behind on the payment and into debt. If you continue to be unable to service your credit card outgoings then you could be taken to court by the lender and of course you would not be able to obtain credit.
You could take out credit card protection with an independent provider and choose the percentage of your monthly outstanding balance each month you want to insure. This amount would be the replacement income you receive back each month for the term of the cover if a claim has to be made due to losing your income. There would be a certain amount of days that you would have to be unable to work or unemployment before you can put in your claim and this is dependent on the provider. Some would offer to payout your income once the 30th day had passed and with others it could be 90 days before you could make your claim. Payments could last for a 12 month period and others might extend this to 24 monthly payments, however once the term had been reached, if you have to claim for that long, then payments would cease.
If you are offered the choice of covering your repayments take into account 12 months cover could be more time than is needed and a policy that provided 24 months of cover would be dearer in premiums. Also spare a thought as to how you would manage if you could not make a claim until the 90th day. You would already have 3 months of credit card payments behind you and so could be in debt.
You could choose the level of credit card protection you want. Redundancy and incapacity can be protected in the same policy and if you choose this then of course you would be eligible to put in a claim should you become a victim to any event. However your lifestyle might suggest that you would be better off with a policy that paid out just for redundancy or just for incapacity and this would help to keep down the cost of the insurance. As you can choose you have peace of mind that you are only paying out for protection that you do need. If you choose a policy with premiums that are age based then taking out cover while you are young will allow you to save the most money. While a policy can be a Godsend you would have to check out the terms and the exclusions as there are some to be found in all types of credit card cover offered by all providers.
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