When it comes to insurance, most people think of their house or their car, but it is also possible to insure our financial commitments. While having your car or home broken into or damaged in stressful enough, being unable to meet a debt through no fault of your own may be just as damaging in certain circumstances. Should someone lose their income due to ill health or redundancy, the stress can be exacerbated by mounting debts which, if left unpaid, can lead to a poor credit rating and unwanted attention from creditors. Credit card protection insurance is a policy which guards someone’s ability to keep up with their card-related debt if their income is lost unintentionally.
To qualify for a successful claim on this type of insurance, someone will need to be without an income due to being ill, suffering an injury after an accident, or having been made involuntarily redundant. Effectively the card insurance provider will pay back part of someone’s outstanding balance every month they are without an income due to the reasons mentioned above. This can carry on for quite some time, up to around 12 to 24 months depending on the policy itself.
Credit card protection insurance can not only help someone to continue paying a card debt, in the grander scheme of things it will help guard someone’s credit rating, which if tarnished can affect their ability to get credit in future.
This type of cover works by guaranteeing a percentage will be paid back for each month after a successful claim. So if someone takes out a policy guaranteeing 10 per cent of their outstanding debt, the first payment made by the insurer on a debt of £1,000 pounds would be £100.
Typical conditions include that the policy must be bought for the person named on the card itself and must be taken out by them. This means someone cannot take out protection on behalf of another. Normally the policy holder will have to be a full UK resident. People will also not be able to claim if they end up out of work due to a pre-existing medical condition. This essentially means any health problem which was diagnosed before the policy was bought. So if someone has a history of severe asthma, and ends up out of work because of it, they will not normally be able to claim on their credit card protection successfully.
This type of credit card protection insurance is often offered by big insurance firms and banks, plus card providers themselves. Although it may seem convenient, this is not always the best way of getting the best deal available. You are quite entitled to take protection from a firm which is different to your card provider and firms like protection specialists British Insurance specialise in supplying just this kind of cover and may be able to save someone money.
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