Credit card payment protection offers insurance coverage for extreme life situations such as job loss, illness, injury, and death. Plans vary depending on the circumstances and the credit card company, covering disability, involuntary unemployment, death, and property. However, the amount of monthly payments paid for credit card protection insurance varies from plan to plan, and people with high card balances can still carry a lot of debt despite opting for insurance coverage.
Credit card payment protection offers insurance coverage for money owed to a credit card company. Also known as credit card payment insurance or credit shield, plans vary depending on the circumstances and the credit card company. Payment protection covers relatively extreme life situations, such as job loss, illness, injury, and death.
The most common types of credit card payment protection cover disability, involuntary unemployment, death, and property. Disability and job loss insurance plans generally cover monthly credit card payments. Credit card life insurance plans generally cover the unpaid balance on the card. Property insurance covers payment for a product or service.
Unemployment protection comes into play when a person loses their job, but there is at least one important stipulation. Unemployment must be involuntary and does not cover resignations or intentional abandonment of work. As with most types of unemployment insurance, payments under these circumstances generally have strict guidelines. A time limit of one to two years generally restricts how long these benefits are paid.
Activating disability credit card payment protection also comes with restrictions. The credit card company can only offer coverage for specific types of disabilities, and this varies from plan to plan. Credit card insurance payments with this type of plan can last a year or two, but rarely longer.
The amount of monthly payments paid for credit card protection insurance varies from plan to plan. Disability or job loss insurance may pay only the minimum monthly payment, and interest on the outstanding balance will still accrue. In this case, credit card insurance protection can do little to reduce the credit card balance. People with high card balances can still carry a lot of debt despite opting for insurance coverage.
Another type of credit card payment protection, called credit card life insurance, covers the death of the credit card owner. This type of card payment protection plan pays the full balance owed on the credit card when the customer dies. In many cases, these plans require that the credit card company be the beneficiary of the credit life insurance plan.
Property insurance coverage usually comes with the credit card and insures purchases charged to the card. These plans may require specific conditions to refund money on an item. A common reason to use this type of insurance would be to dispute a charge for damaged merchandise. This type of payment protection is for a one-time payment instead of paying your bill or credit card balance.
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