Three Things I Don’t Like About Credit Card Insurance

Any form of insurance that protects you and your assets has to be good.  Designed to protect your credit rating in the event of a job loss or any similar event that leaves you unable to settle your balance, it makes sense to pay for it on the surface.

Unfortunately, credit card insurance is frequently one of those things that carry more drawbacks, compared to its benefits.  What is there about credit card insurance that’s not to like?  Consider these:

Credit card insurance is very expensive. If you have 5 credit card accounts, you’ll need to pay for 5 insurance policies.  At costs averaging between $10 to $20, that’s a lot of money that most people can probably better use somewhere else.

Filing for claims is hard. Like all insurance policies, requirements for claims is very strict.  Even worse, some of the requirements may not be what you’re expecting and are often compounded with additional conditions (such as having to present updated proof of unemployment month-to-month).  Let’s just say that insurance companies make a ton on credit card insurance and generally pay out in very few cases.  Make sure to get an expert’s opinion before signing up for credit card insurance as the terms are generally very confusing.

Benefits aren’t even that good. Credit card insurance doesn’t pay your balance.  Instead, it just settles you monthly minimums, which means your total debt will barely even show any improvement.

While they may prove helpful when you do encounter problems, credit card insurance is generally not a great feature to take advantage of.  The potential benefits just doesn’t add up.