Is it Worth Getting A Credit Card Protection Insurance?
Credit card holders are offered with balance protection insurance. As you hear the offer, it might sound appealing as it implies that it will be useful when you’re facing financial challenges and at times when you’re unable to settle your outstanding balance. Looking superficially, balance protection may be a wise financial move, but does it all it declares to be? In this guide, let’s take a tackle this matter in detail.
Credit Card Protection Insurance
Repaying debt is quite challenging for most people, especially when you’re facing financial struggles. Whether you suddenly lost your job, or suffer a critical illness, balance protection is deemed to be your lifeline during this unfortunate state of your life. Balance protection insurance is similar to other insurance, where you have to pay an insurance premium for you to be covered. This will be according to your outstanding balance, meaning the larger amount you owe the higher your premiums will be.
An example of this sales offer is from TB Bank, which states: “TD Balance Protection Plus and TD Balance Protection Insurance are two credit protection insurance products designed to assist in managing your credit obligations on your TD Credit Card(s) in the event of a covered involuntary unemployment, loss of self-employment income, total disability, loss of life, dismemberment, critical illness or disability requiring hospitalization.”
The Downside of Credit Card Protection Insurance
Well, similar to the other insurance offers, credit card institution isn’t going to offer balance protection without getting any gains. Thus, when you favor getting this insurance, you must scrutinize every single details on your document, since each plans are distinct from the other. Besides, the coverage of your balance protection insurance may vary as well depending on your credit card company. Some institution only grants coverage for minimum payments, while some others will take accountability for the full balance. This is the primary reason why you need to know the pros and cons before making the decision.
Moreover, the same as your mortgage insurance, it doesn’t have the flexibility of critical illness or impairment insurance. This means that balance protection insurance coverage only includes your outstanding credit card debt.
Self-Insurance
In general, it is wiser to insure your self adequately to anticipate uncertainties that may arise. The simplest way to put this in place is through disability insurance, emergency fund, or life insurance. Having this rolling will guarantee a solid protection against any financial challenges. Besides, this can equate to a more secure future in terms of finances.
