Why You Need Credit Card Protection Insurance

As much as you try to prepare for all possible eventualities, you can never really be fully prepared for those unfortunate and unexpected events that seem to come out of left field when you least expect it. After all, you can never really avoid sickness or injury or even accidents—at least, not completely. The most you can really do is to ensure that you and your family are insured, just in case some misfortune falls upon you (knock on wood), and just hope for the best. And the reality is that, sometimes, this simply isn’t enough.

Insure your family against debt

This is where products like credit card protection insurance—or credit shield, to some providers—come in handy. In layman’s terms, credit card protection insurance is designed to provide financial support to credit card holders, when explicitly needed, by taking care of the repayments of credit card balances. This kind of insurance will usually take effect if the credit card holder becomes seriously or terminally ill, suffers a major trauma or injury, or even dies. Some variants of this kind of insurance may also cover involuntary unemployment, as well.

Your options

Generally, there are two kinds of credit card protection that you can take advantage of. The first kind is called loan cover, which will pay off your entire outstanding loan balance as long as certain conditions are met, such as if one is suffering from a terminal illness or serious medical trauma, among others. The second kind provides credit card repayment cover, this basically covers your monthly minimum credit card repayments, if you unexpectedly and involuntarily lose your job, or if you are suffering a disability. This kind of credit card protection will usually only cover your monthly repayments up to a specific period of time—usually enough time for you to get back on your feet and resume your loan obligations.

The benefits you enjoy

There are numerous benefits that you can enjoy when you have credit card protection insurance of any sort. First of all, there is the obvious peace of mind of not having to worry about your finances, should some unfortunate situation befall you and change your current circumstances. Second, your family will not end up carrying the burden of your debt, should you die or become seriously ill. This is particularly important if you are the main or sole source of income for the family. Third, because your credit card protection will pretty much keep your monthly repayments up to date while you are incapacitated, you will not be left scrambling to pay for any arrears once you do get back on your feet. And lastly, taking into account that you will be up-to-date on your monthly payments, your credit score will not, in any way, be affected by your current financial predicament.

As you need it

Now, some credit card providers may make it seem like credit shield, or credit card protection is mandatory when you have been issued a credit card. In reality, this is completely voluntary. Furthermore, you can even get credit card protection separately and from a different credit card company or insurance provider, if you are so inclined. It is definitely a good idea to shop around for the insurance that will work best for you.

Be aware that just like all insurance policies, credit card protection actually has specific clauses and exclusions. As an example, some of these will not cover you if you are self-employed, contractual, or only work part-time. There may even be clauses for pre-existing medical conditions. This is why it is really a good idea to take the time to review all the terms and fine print of the policy and make sure that you qualify before you commit to it.

It is also up to you to decide the level of coverage for your credit shield. By simply considering your regular streams of income, you can already decide if you really need full coverage, or only partial coverage would suffice.

Just like all insurance policies, credit card protection is an investment towards your peace of mind. If your family’s welfare during tough times is your primary concern, then this is one thing that you must have in your arsenal as you prepare for the worst.