What is a credit card protection plan?
This is a type of insurance that aims to provide a cardholder with security in case of unemployment, injury, disability or death.
If you suffer from an unforeseen life event, a credit card protection plan can be helpful in preventing your debt from spiralling beyond your control.
How a credit card protection plan works:
Life can be unpredictable and having credit to pay off can be stressful when you are facing an unexpected life event. Your family may be left to pick up the pieces and have to pay your credit card debt off if you don’t have any form of a credit card protection plan. For this reason, it’s important that you make sure that you get a suitable credit card protection plan for your needs.
Credit card protection needs are very specific to a person’s unique life situation.
You pay a premium that is tied to how much you owe on your credit card.
This insurance cover maintains the minimum payments on your credit cards if you lose your job or are mentally disabled.
Specific benefits vary. A credit card protection plan may provide protection against accidental illness or death.
It may be expensive in comparison with other forms of insurance and may not be as flexible as traditional life and disability policies.
There are four main types of credit card protection plans:
- Credit life insurance
- Credit disability insurance
- Involuntary unemployment credit insurance
- Credit property insurance
Considering your current and future financial needs is the first step in determining if you might benefit from a credit card protection plan.
When you sign up for a credit card protection plan you need to make sure that you ask what is excluded in the policy.
Make sure that you are not paying for something you don’t need.
