Every valuable thing whether living or non-living needs insurance these days. Health and life, the most important things for an individual need to be insured but apart from these, the non-living things such as mobile phones, laptops, etc are also required to be insured. Similarly, credit card plays a very important role in our lives and needs to be insured. But before going any further, it is very important for us to know that what credit card insurance is and what type of insurance does a credit card carries with itself. Having a clear knowledge of credit card insurance will help you in getting your claims processed in a smooth way and you won’t have to face many issues.
What is credit card insurance
Credit card insurance is a type of an insurance policy that helps you in case of unfortunate circumstances such as death, disability and in rare cases, even unemployment, to pay off your existing debts. The policyholder remains protected from the lender even if the borrower is unable to repay the debts due to various reasons. In the unfavorable circumstances, the lender will be paid through the insurance company on behalf of the policyholder.
The insurance benefits typically come along with the credit card and you do not have to additionally pay for it. The issuing bank may elect to pay an insurance company for certain benefits that automatically extend to a cardholder on a noncontributory basis when they make a qualified purchase. Since the credit card market is highly competitive, hence the financial institutions have to look out for a way in which their card stands apart from the rest present in the market. Therefore credit card insurance is one of the ways to make a particular company’s card attractive in the market.
Types of Insurance Covers offered by the Credit Card Companies
The types of insurance cover offered depend on card to card and bank to bank. All the details about such offers will be provided to you in the Welcome Kit that comes along with the credit card. Some of the popular insurances that come along with credit cards are –
- Purchase Protection
- Travel Insurance
- Accidental Insurance
- Credit Insurance
With this insurance, your belongings are insured during your travel. This offers you various types of insurance such as –
- Delayed/lost baggage insurance
- Insurance against loss of ticket
- Insurance against baggage where the baggage goes missing for more than 48 hours after you have arrived at your destination.
Credit insurance is a type of insurance in which a credit cardholder might get a waiver on his outstanding bills in case of uncertainty, such as death
Purchase protection is an exclusive insurance cover that provides you insurance against the items purchased through your credit card that might get damaged because of fire or theft. With this protection cover, you get the privilege to return the damaged goods even after the warranty of those products has been expired.
Various credit card companies offer accidental insurance cover along with their cards. If there arise circumstances of mishappening i.e., death of the credit cardholder, while you are traveling on the flight, the nominee of the credit cardholder will be entitled to the insurance amount. There are some cards that offer only air accidental death cover while others offer accidental death cover. Depending on the bank to bank, the insured amount under this insurance coverage may go up to Rs. 5 crores.
Now that you have understood the benefits of the insurance policies, you should always opt for them if your credit card company is providing these to you along with the credit card. You should be well aware of the policies that come along with your credit card and can be used at the right time. It is important to have such policies as these prove to be very helpful in case of emergencies.