With so many different offers being put to cardholders, and with many of these from telemarketers rather than the card issuer, it’s difficult for a cardholder to know what is a legitimate offer and what constitutes someone trying to obtain access to your information when information is processed over the telephone. The major key to knowing what constitutes a legitimate offer is that the caller will have no need to ask for your credit card number as the card issuer has already provided this information to the caller’s representative or company.

The most important thing to keep in mind is that if you have any doubt about an offer made over the telephone, call your credit card issuer and inquire. Either that, or ask for the telephone number of the caller so that you can call them back, but never give credit card information to anyone who called you. With all of the solicitations being made to cardholders for different kinds of insurance products, it’s easy for a cardholder to be entrapped by an unscrupulous salesperson and be deceived.

Only accept offers in which you are truly interested – don’t let a salesperson talk you into something you do not want, do not feel you need, or that you already have. Choose carefully the products you want to purchase and allow yourself time to review the details before you make a final decision. Certain insurance products are important to have in order to protect your financial security and that of your family, and these should be thoroughly researched to guarantee their authenticity. The most important insurance to have on your credit card includes life insurance to pay the bill if you should die, disability insurance to cover the payments in case of illness or injury, and buyer protection insurance for purchases you make with the card. Travel insurance is usually free, so unless you don’t have any on your card or want to add extra, be wary of these offers. When it comes to credit card insurance, more is not necessarily better because in most cases, an extra policy is not going to cover anything additional, so the only thing additional you will receive is another addition to the balance on your card.

With all of the different offers that credit card issuers make to their cardholders, you would think they were holding stock in some of the insurance companies, and perhaps they are. Worse yet is the fact that if you decline one offer, a month or so later they are sending you another offer quite similar to the first. Not only that, even if you accept an offer, you still receive a similar offer to one you already accepted. It becomes annoying after awhile, and you begin to wonder whether you have made the right choice and whether you do need any of the additional insurance offers that are bombarding your mailbox and email inbox.

How do you know when to stop? The credit card issuer assures you that this is a great deal and that you just have to have this insurance, but you already have insurance to cover what they are offering. At least you thought you did until they convinced you that you need more. The truth is, you have to decide for yourself whether you need more insurance and how much. Never let someone talk you into taking someone you are not sure you’ll need or duplicating something you already have. That may work for regular life insurance, but when it comes to credit card insurance, you are not going to get insurance that is going to pay you instead of the balance on the bill or disability that will pay you in spite of the fact that another company is already making the payments. Remember, when you receive a phone call, the person on the other end may not even be a staff member of the card issuer, but is a telemarketer just looking to make a sale.

There are some cases where more insurance is good such as with travel insurance when there is a set dollar amount on coverage. The cardholder may have an option to increase that coverage; however, with life and disability, there is no option for increased coverage, so to purchase an additional policy would be a waste of money. If you are unsure how much coverage you will receive, take the insurance on a thirty-day trial basis, which is often free, and use the time to review the information that you receive and decide if you want to keep it.

For many people the thought of travel insurance on a credit card is not a topic of consideration. After all, it’s not something everyone uses unless you do a frequent amount of traveling. On the other hand, if you do need it, your credit card issuer makes it easy to obtain. Certainly, you can purchase the insurance from your regular insurance carrier, but the question is whether you can pay the same price.

In addition to travel insurance, many of the affinity credit cards include airline insurance within the scope of the travel insurance. Not all credit card issuers offer these bonuses, so you will have to check the benefits of each one and decide which one offers you the best. Unlike other types of credit card insurance, many of the credit card issuers offer travel insurance as a free service to its cardholders. This is especially true of American Express and the frequent flyer programs that many issuers offer on their MasterCard and Visa cards. You want to be certain of this before you accept a credit card that offers travel insurance, especially if you are trying to weigh the cost of accepting it through your credit card issuer or purchasing it on your own.

Travel Insurance Pros and Cons

The question is whether you really need travel insurance, and anyone who asks that question has not traveled extensively or has not read the reports of incidents that have happened to people while traveling. We don’t like to think of being injured while traveling, but it’s a part of life, and to deny that fact is to deny life as we know it. Accidents are going to happen whether it’s in a car, airplane, train, bus, or in the confines of your hotel room. If you are prepared for it with a travel insurance policy, the aftermath is much easier to accept. It can be a skiing accident or a plane crash, but if you are prepared, it will be easier on you and your family.

Of course, to look at it from another perspective, some might be of the mindset that to purchase travel insurance is courting disaster. In other words, if I’m prepared it is more likely to happen, but we know from life experiences that quite the opposite is true. Be prepared with a good travel insurance policy and enjoy your vacation.

One of the most frustrating things in life is to purchase an item, especially a big-ticket item, only to take it home and find out that it doesn’t work. The first though on your mind is that you will have to find with the merchant to either get your money back and a replacement. Even worse is the aggravation of having to pack it up and return it to the place where you bought it. It’s somewhat easier if you bought it at a local store where you can return it for full credit or replacement, but for those times when the store policy is “store credit only,” it can be equally frustrating.
What is the solution to this dilemma? If you have a credit card that offers a buyer protection plan as some do, your problem is solved. You return the item to the store or merchant where it was purchased, and the credit card issuer credits your account for the original purchase price. Of course, the stipulation is that you charged the original purchase to your credit card. Even if all of your credit cards have a buyer protection plan, if you paid for your purchase with cash or check instead of your credit card, it is beyond the jurisdiction of the credit card issuer.

It’s important to remember that not every credit card company offers a buyer protection plan, but if they do, it is included with the list of benefits that the card offers. If this service is something that is important to you, which it should be if you make frequent purchases of products that may be subject to problems during shipment such as electronics, be sure you research the card issuer before you apply for the card if they have buyer protection insurance.

Be certain to keep in mind that there are a great many credit card issuers who offer buyer protection insurance, so simply because the first two or three you see do not offer it, do not assume that it’s the industry standard. It may require searching a little further or even contacting some of the credit card issuers to find out which of their programs include this very important feature. By taking a little extra time, you will find the features you want in a credit card, including a buyer protection insurance plan.

Many credit card issuers also offer protection for those who have lost their jobs through no fault of their own. Like the disability and life insurance, credit card protection for unemployment is based upon a percentage of your unpaid balance. Whether this kind of insurance is important to you depends on many things. Certainly, if you are a business owner with a business that is doing well, you don’t have to worry about being unemployed. This insurance is not for illness or anything of that nature; it is solely for those cardholders who find themselves out of work due to layoffs, downsizing, company closings, and other similar situations.

The thing to remember about the unemployment insurance is that it will not cover anyone who quits their job with no valid reason – works similar to unemployment compensation in that respect. The rules state you must be unemployed through no fault of your own; however, there are circumstances that would justify that just as there are circumstances under which you can quit your job and file for unemployment, namely those incidents in which the employer is violating the labor law in some way.

Even if you have held the same job for many years and have never faced a layoff, with the economy being what it is today and with companies merging and downsizing, it’s a good idea to protect yourself. It’s not uncommon for companies to force older workers into retirement, and if your company doesn’t have a nice severance package, you can be financially ruined. Taking insurance to cover your payments should you become unemployed is a good way to prevent that from happening. Remember, the older you are, the more difficult it is to find more work, and in the present state of the economy, companies are seeing how they can do more with less people. No one’s job is secure today, thus the reason many people are opening businesses or starting businesses at home.

The rate for the insurance is going to vary from card issuer to card issuer, so if you have more than one credit card from different issuers, do not assume the rates will be the same even if the balances are close. Like all insurance, there can be a number of reasons for this including a large number of claims and the number of participants in the program.

When you look at the fact that the payments go directly to the credit card issuer, it’s easy for a cardholder to say that the credit card issuer is the one who benefits, but that line of thinking is certainly unfounded. After all, the credit card issuer did not take the credit card and buy things with it, and as such, it has no personal attachment to the merchandise that was purchased with the card it issued. The credit card issuer does not have anything to lose in the transactions because it is not his credit reputation that is going to be hurt if you are unable to make the payments. It is also not his family that is going to have to pay the credit card bill out of the estate if you should die without credit card protection insurance.

Of course, the credit card issuer benefits in the respect that he will get his money if you have credit protection insurance, but it isn’t his major concern because he knows he will get his money as long as you are able to return to work at some point or if you die and he places a line on your estate. The one who stands to lose without credit protection insurance is the cardholder. After all, when the cardholder is unable to make the payments, it is his credit reputation that is at stake, and if the illness or condition lasts due long, it can financially ruin him.

The facts are that it is the cardholder who stands to lose the most in case of an illness or injury that prevents him from working if he has no credit card insurance. You have to be the one to take the steps to protect yourself and your financial well-being. You have to be the one to decide if you feel your credit rating is important enough that you should invest a few extra dollars per month to protect yourself with credit card protection insurance. The final decision is ultimately yours, but you want to remember that you are protecting your credit rating, financial well-being, and your family by taking advantage of credit card protection insurance. The price you pay is minimal in comparison to what you stand to lose by not taking the insurance. As the cardholder, you must decide what is most important.

In most cases, the only qualifying factors are that you are a cardholder in good standing with no current medical conditions that might cause you to become ill or disabled. In most cases, preexisting conditions are not covered, so even if you take the insurance, and you become ill because of the condition, it will not be covered. That doesn’t mean that you shouldn’t take the insurance if, for example, you have a back problem that may put you out of work in the future, because you may suffer an illness or disability that is not related to your back problem at all. You have to weigh each possibility and decide what the best course of action is. If your back has never caused you to lose work for more than a couple of days, then it probably will not happen to the degree that will require you to be out of work for any length of time – at least not any time soon.

The major issue that you do have to remember is the term “member in good standing,” which means that your account has to be up to date. Even if you have the insurance, and your account is past due, the insurance will not cover any condition you have because of the lapse in coverage. This is true of any kind of insurance, of course, but when you are paying monthly as you are with credit card insurance, if you miss one payment, the insurance lapses. Once your bill is up to date, the issuer may choose to reinstate it, but if they don’t reinstate the lapsed coverage period, you are now into the “preexisting condition” phase and won’t be covered. In order to prevent this from happening, if you have credit card insurance, make certain that you keep your payments up to date, even if you can only afford to pay the minimum payment – that will at least prevent your account from going into default and causing the loss of your insurance.

Another thing of which to be careful is your balance because your disability insurance will not cover any over limit fees or payments, and your life insurance will not cover any balance that is over the credit limit. On the disability, when it states it covers the minimum payment, that translate to the minimum payment based on your balance without over limit fees and without consideration for the portion of that balance that is over the limit. In other words, if your credit limit is $3,000, but your balance is $3,125, the insurance will make a minimum payment based on no more than $3,000. Likewise, with life insurance, if you should die, it will only cover a balance up to the amount of the credit limit.

The answer to the question of whether credit insurance is overpriced depends whether you are looking at it as a whole or whether you are looking at it in terms of what other credit card issuers are charging. Even if your credit card issuer charges more than that of another issuer, you have to look at the benefits that are part of the package before drawing any conclusions. For example, Credit Card Issuer A may only charge 1.5% for disability insurance but requires that you be out of work the usual thirty days but will only pay for six months, whereas Credit Card Issuer B charges 4%, still requires a thirty-day wait but pays for one year. You need to consider these things before you determine that your credit card issuer charges too much for credit card insurance, and as such, make the decision not to purchase it.

Credit card insurance is an open market, and you have to remember that the credit card companies themselves are not financing the insurance, but are contracting with an insurance company to provide the benefits. Because of this, there is going to be a fluctuation between different credit card issuers because they will be using a different insurance company in most cases. Even if they use the same company, there may be different reasons why rates are different with credit card issuers, one of the most likely be the amount of participation. One of the rating factors that insurance companies use for premiums is the number of participants in a group, meaning the more participants, the lower the rate will be. This is why group rates for any kind of insurance are lower than that of an individual policyholder. The amount of claims is also a contributing factor, which may be another reason different credit card issuers have different rates for credit card insurance.

Before making a decision based on the rates your credit insurer charges, make sure you consider all of the possibilities and look at what the future may hold for you if for some reason you need the insurance and it is not there. Remember, once you become ill or injured, you cannot suddenly decide to take the insurance in order to cover that incident. The insurance must be in force prior to the incident in order for it to be covered.

Everyone has been exposed to those monthly credit card statements that include a variety of inserts for many different offers. On top of that, the credit card issuer has a tendency to call frequently offering you some new insurance program that is “free” for the first thirty days, but you have to sign up right then. The difficult part is that there are so many different offers that they will try to sell you, it’s hard to decide what’s important and what isn’t. Review the possibilities and decide what you really need before you decide to buy any kind of credit card insurance.

Disability Insurance

Depending on the company for whom you work, this may or may not be a priority item for you. With disability insurance, if you are ill or injured and cannot work for at least thirty days, the minimum payments on your credit card will be covered if you are up to date with the payments and not over your credit limit. If your company pays your salary while you are ill, or within a reasonable percentage, you may not need this insurance, but you want to look at it from a long-term perspective before you decide such as considering how long your company will pay you for your illness. The disadvantage with this insurance is that if your credit cards are nearing their credit limit, the minimum payments covered by the insurance are not going to reduce your balance, and may in essence eventually cause you to exceed your credit limit because of the interest.

Life Insurance

If you don’t take any of the other insurance that is offered, you should definitely put this one on your priority list. If you should die, the insurance will cover the balance on your bill as long as it’s up to date and not over your credit limit. This saves your family from losing money out of the proceeds of your estate because of bills that need paid. You may feel it can’t hurt your credit when you’re gone, but it will hurt your family by reducing the amount of available funds from your estate. Without insurance, your creditors will attach a lien to your estate that will have to be paid before your survivors receive any of their inheritance money. In order to protect your family from undue stress and financial hardship, insure the balances on your credit cards.

With interest rates being what they are today, and some credit cards charging higher rates than the average consumer wants to pay, it doesn’t always seem that adding something else to the bill is worthwhile. At the same time, a cardholder has to look at the potential for needing the insurance. This, of course, depends on the type of insurance that the card issuer offers.

One of the things that tend to draw cardholders away from credit card insurance is the cost, which is usually a percentage of the unpaid balance at the time of the billing cycle close. It tends to put up a red flag, and the cardholder thinks it’s just another way for the card issuer to get more money. They also see another way that they will never get the balance paid, but sometimes this line of thinking is not realistic. After all, if something should happen to you, and you don’t have the money to pay even the minimum payment on your credit cards, the insurance is a way for you to preserve your good credit.

If your card issuer offers insurance for either disability or unemployment, it is in your best interest to take them up on these offers. After all, if you become ill for a long period or you lose your job, the insurance will cover the minimum payments on your credit cards until you return to work. When you think about the potential financial ruin you can face by being unable to make your credit card payments, a few extra dollars a month is a small price to pay.

Another insurance that is often offered by credit card issuers and is a good thing to have is life insurance that will pay off the bill in the event you die. It’s easy to say that once you are gone, it can’t hurt your credit, but the reality is that if you die without insurance on the bill, it becomes part of your estate and will have to be paid out of the proceeds before your family sees any of the money. You will protect your family by insuring the balance on your bill and prevent it from becoming a part of the liabilities of your estate, thus reducing the amount of cash that is available for your family.