You probably have received a notice in the past stating that you can get insurance on your credit card for a few extra dollars a month. Credit card protection insurance can help you if you find you cannot make your minimum card payments for some reason, but this insurance isn’t always worth the cost.
Credit card protection insurance is designed, normally, to cover a minimum payment for a specified time. For example, if you suffer an injury and become disabled, it may cover your card payments for 12 or 24 months, depending on the lender.
Usually, when this protection comes into play, you don’t have to worry about late fees or interest on your debt. Some lenders will reduce your balance or cancel your payments for a period of time until you can resume them again.
In cases of death, credit card insurance could also help completely pay off the debt for the estate.
Why doesn’t credit card insurance always help?
Remember, you will pay a fee each month for this insurance, which is added to your balance. Additionally, it may not cover your payments if you:
- Are denied unemployment due to being a part-time, seasonal or self-employed worker
- Are still within the waiting period
- Have a preexisting health condition that excludes you from the insurer’s disability coverage
There are other terms and conditions that may make credit card insurance an expense that doesn’t really help, too.
If you have credit card insurance and get behind on payments, it’s worth talking to your lender to see if the insurance can be used to help pay your debt for a period of time. If not, then it may be worth looking into other options, such as debt consolidation or bankruptcy.