A Smart Guide to Credit Card Insurance
Credit cards get a lot of interest because of their rewards and sign-up bonuses, but there’s a treasure trove of price in the credit card insurance benefits also offered.
If you’re on the fence about whether or now not to get a credit score card, you would possibly think that the rewards, pastime rate, or charges are the most vital things to consider. But whether or no longer you format to use a credit card regularly, it’s the insurance plan advantages that might make it well worth it in the end.
Credit card insurance advantages don’t get a lot of fanfare, however if you use them right, you get greater cost from them than you’d earn in rewards from using the card.
Types of credit card insurance coverage and benefits
Credit cards offer several types of insurance coverage, both for everyday purchases and one-off needs. Some are ubiquitous while others are rarer. Here are the main credit card insurance benefits you may come across:
Price protection coverage
This benefit essentially insures you against price decreases after you buy a product. If this happens within a specific period after your purchase—usually two or three months—you can submit a claim and get a refund for the price difference.
Purchase protection coverage
If an item you bought with your credit card gets damaged, lost, or stolen within two to three months after the purchase, you can tap this benefit.
Depending on the credit card, you could get reimbursed up to the full amount you paid for the item.
Return protection coverage
If you’ve ever had trouble returning an item you purchased, you may have had an opportunity to utilize a return protection benefit. Where retailers may deny your return for whatever reason, your credit card may offer a refund instead.
This benefit is usually valid for two to three months after you made the purchase.
Cell phone insurance coverage
If you pay your cell phone bill with your card, you’ll get up to $600 in protection if the phone is damaged or stolen.
Rental car insurance coverage
If you’ve ever rented a car, you know how expensive the added collision damage waiver can be. In some situations, it can cost almost as much per day as the rental itself. With credit card rental car insurance, you can skip the collision damage waiver.
Lost luggage protection
Some travel credit cards offer this coverage in case you lose your luggage, or it gets delayed. Your credit card can reimburse you up to a certain amount for lost items. Or, if your bags get delayed, reimburse you for essentials that you have to purchase in the meantime.
Trip cancellation/interruption insurance coverage
If you ever have to cut a trip short or cancel it altogether because of an illness, injury or death, your travel credit card may help you recover some of the nonrefundable travel expenses you’ve incurred. Some cards even offer this insurance if the cancellation or interruption happens due to severe weather.
Note: That if you don’t have a credit card that offers this coverage, you can purchase travel insurance separately.
Are the perks alone worth it?
In short, yes. You can get a lot of value out of these fringe benefits if you keep track of when you qualify. For example, I bought an iPhone SE in 2017 when my previous phone died a watery death.
A couple of months later, Apple dropped the price of the model by $50 when it launched the iPhone 8 models. I knew this would happen and kept my receipt so that I could submit a claim for price protection. I included a copy of the receipt, my credit card statement, and a copy of the advertisement with the lower price, and within a few weeks, I got a check for $50 in the mail.
Some things to consider
While these insurance benefits may sound like a treasure trove, it’s not always easy to take advantage of them. That’s because a lot of these benefits have exclusions and caveats.
For example, you have to keep a lot of records on a purchase for price, purchase, and return protection. And some items, like certain electronics purchases, may not qualify for the benefit at all.
Credit card issuers also have limits for how much they’ll pay out per claim and per year, and they may limit how many claims you can make. So, you can’t claim every little thing that happens.
Also, most credit cards offer what’s called secondary rental car insurance. This means that if you get in an accident, it’s your personal insurance policy that gets tapped first, which can increase your rates.
Credit card rental car insurance also doesn’t include liability or personal injury coverage, and it may not cover certain types of vehicles or rentals in certain countries.
Inquire about the Credit Insurance Policies Being Offered to You
If you decide that credit insurance is for you, it is important to know about the policy you are getting. You will want to ask about what is excluded in the policy. And remember that if you purchase a credit insurance policy that encompasses all 4 types of credit insurance (life, disability, unemployment, and property), make sure you are not paying for something you don’t need. For example, if you are not employed at the time of getting the unemployment insurance you are paying for a coverage that you will not use.
How to get the most out of your credit card’s insurance benefits
If you want to get as much value out of your credit card as possible, it’s essential to maximize your credit card’s insurance benefits. Here are three things you can do to accomplish that goal.
Keep good records of every purchase you make Receipts are mandatory for many of the insurance benefits we’ve listed, so don’t accidentally throw these away, especially on big-ticket items where you’d get the most value. Don’t worry about getting paper statements, though. You should be able to access your statements through your online account.
Know the limits and exclusions These insurance benefits come with a lot of fine print, so it’s crucial that you know what does and doesn’t qualify, and how much you can get. You can usually find this information in your cardholder agreement that you received with your card. If you no longer have it, reach out to your credit card company and ask for a copy or if they have it online.
Get some help There are apps that can help you keep track of these benefits and when you can make a claim. For example, Sift can help automate much of the process of keeping track of items and price changes. It will also let you know which benefits you’re eligible for with each purchase you make.
You Might Want To CONSIDER Insurance Offered by Credit Card Companies
Knowing what credit insurance is and the different types can help you make an informed decision. Credit insurance can come in a variety of forms. The four main types are credit life, disability, unemployment, and property:
I.Credit life insurance pays off the debt you owe if you die. The beneficiary of the policy has to be the company that the debt is owed to.
II.Credit disability insurance protects your credit rating by making your monthly minimum payment if you become medically disabled. Usually, there is a set time period that payments will be made and additional purchases after the disability will not be included.
III.Involuntary unemployment credit insurance will make your minimum monthly payment if you are laid-off or downsized, and again, purchases after the involuntary unemployment would not be covered. IV.Credit property insurance usually will completely cancel debt on items you purchased with the credit if the items are completely destroyed by specific incidents listed in the policy and a deductible would not apply for the damages to be paid. Verdict!
Credit cards get a lot of interest due to the fact of their rewards and sign-up bonuses, but there’s a treasure trove of value in the insurance plan advantages these cards offer. While it does take some extra legwork to take gain of your credit card’s insurance benefits, the time and effort spent are regularly well worth it, and if you use the right tool, you would possibly even be capable to outsource a whole lot of the work.