Credit Cards With Life Insurance: What's The Deal?

Credit cards offer a wide range of benefits, from cashback and reward points to purchase protection and insurance against fraudulent transactions. Some cards even offer life insurance, but this is usually in the form of credit life insurance, which is designed to pay off any remaining balance of a person's outstanding debt if they pass away. This type of insurance is often sold by lenders when taking out a loan and the lender or bank is the beneficiary of the policy, not the policyholder's family. Credit cards that do offer life insurance usually provide personal accident insurance, which covers the cardholder in the event of an accidental death.

Credit cards that offer life insurance

Credit cards offer a wide range of benefits, including insurance products that can be very useful in certain situations. While credit cards do not offer life insurance, they do offer personal accident insurance, which is a common type of insurance coverage provided by credit cards. This insurance provides coverage in the event of the cardholder's accidental death, with the coverage amount ranging from Rs. 2 lakhs to Rs. 40 lakhs, depending on the type of card and the nature of the accident.

• Credit Insurance: In case of accidental death of the cardholder, credit cards that offer credit insurance will waive outstanding credit card bill payments. Nominees of the cardholder need to provide a death certificate to avail of this coverage. The insurance company may offer this benefit based on the personal accident claim made by the nominee.
• Personal Accident Insurance: This benefit is offered by most credit cards and provides coverage in the event of the cardholder's unfortunate death due to an accident. The coverage amount varies depending on the type of accident, with road accidents typically covered from Rs. 2 lakhs to Rs. 4 lakhs, and air accidents covered from Rs. 10 lakhs to Rs. 40 lakhs.
• Lost Baggage Insurance: Some credit cards offer protection against the loss of checked baggage on both domestic and international flights. Coverage can be up to $1200 in the event of theft or loss.
• Purchase Protection Insurance: This insurance covers items purchased using the credit card against loss or damage due to theft and fire for a certain period, usually 180 days from the date of purchase.

It is important to note that the insurance coverage offered by credit cards varies from one card to another, and it is recommended to carefully review the services guide or the card issuer's website to understand the specific benefits and coverage provided. Additionally, most credit card insurance benefits are available only for primary active cardholders, and there may be specific eligibility criteria based on card type, credit limit, and card issuer.

Types of credit card insurance

Credit cards can come with one or more types of insurance embedded in them. While the insurance benefits can seem overly complex, they can provide economic relief if you need to file a claim for a covered incident. Here are some of the common types of credit card insurance:

Shopping Insurance Benefits and Protection

Most credit cards come with some level of protection for items purchased with the card.

• Purchase Protection Insurance: This covers eligible products purchased with your card that have been lost, damaged, or stolen within a stated time period from the date of purchase.
• Return Protection Insurance: This covers items that a merchant will not accept for return. There is a specific time frame for this coverage, usually 90 days, and a maximum dollar value per item.
• Extended Warranty Protection Insurance: This adds years of protection to the manufacturer's warranty for qualifying items. The original warranty must be less than 3 to 5 years, depending on the card, and the extended warranty may only match the length of the manufacturer's warranty if it is less than a year.
• Cell Phone Protection: This covers damage and theft of your mobile phone. To qualify, you usually need to pay your monthly phone bill with the card offering this coverage.
• Price Protection: This allows you to submit a claim if you find a lower advertised price for a purchased item within a certain time frame, typically 90 to 120 days.

Travel Insurance Benefits and Protection

• Primary Car Rental Insurance: This provides coverage for damage, theft, loss of use, and towing when renting a vehicle. It is activated when you decline the collision damage waiver (CDW) or loss damage waiver (LDW) insurance from the rental car company.
• Roadside Assistance or Dispatch: This provides services such as towing, tire changing, emergency fuel delivery, jump starts, and lockout service if you experience a breakdown while travelling.
• Travel Accident Insurance: This provides coverage in the event of death or severe injury when travelling on a common carrier during a covered trip.
• Trip Cancellation and Trip Interruption Insurance: This provides reimbursement for unexpected expenses or change/cancellation fees if your trip is cancelled or disrupted due to a covered event.
• Trip Delay Insurance: This provides coverage for incidental expenses if your trip is delayed by a certain amount of time, usually 6-12 hours.
• Lost and Damaged Luggage Insurance: This provides compensation if your baggage is lost, damaged, or stolen during travel.
• Baggage Delay Insurance: This provides reimbursement for incidental expenses if your baggage is delayed by a specific amount of time, usually more than 6 hours.

Other Types of Credit Card Insurance

• Balance Protection Insurance: This pays out the outstanding balance on your credit card or makes monthly payments on your behalf if your income is interrupted by unforeseen events such as job loss, disability, critical illness, or death.
• Credit Card Travel Insurance: This includes travel medical insurance, which covers health-related expenses, and trip protection, which provides additional travel insurance such as trip cancellation, lost luggage, auto rental collision/loss damage, etc.

Credit card insurance exclusions

Credit card insurance is subject to terms, conditions, limitations, and exclusions. These exclusions include pre-existing medical conditions. The exclusions are described in the insurance certificates that come with your credit card package.

• Nuclear risks or contamination due to radioactive substances: Any problem to the business due to nuclear risks or contamination is not covered by credit insurance.
• Customer disputes: If a customer disputes a purchase and withholds payment, this is not covered by credit insurance.
• Interest accrued after the original due date: Credit insurance does not cover any interest amount that gets accrued after the original due payment date.
• Amounts owed by government entities: Amounts owed by any government entity that cannot be declared insolvent are not covered by credit insurance.
• Currency fluctuations: Currency fluctuations are not covered by credit insurance.
• Pre-shipment risks: Credit insurance does not cover any losses that occur before the shipment of goods.
• Other sources of insurance: Credit card insurance may be supplementary to other home, auto, or medical coverage. This means that all other sources of insurance must be exhausted before credit card insurance pays out any benefits.
• Certain pre-existing medical conditions: Travel credit card insurance may not cover certain pre-existing medical conditions that existed prior to the effective date of coverage.

Credit card insurance claims

Credit cards can offer insurance protection for different situations, such as reimbursing you for qualifying travel cancellations or extending the manufacturer's warranty on products purchased with the card.

Understanding Your Coverage

Before making a claim, it's important to carefully review your cardholder agreement to understand what is covered by the insurance and what is not. Most policies have exclusions and limitations, so it's crucial to know the specifics of your coverage. For example, your card's insurance may cover a stolen cellphone but not a lost one. Understanding the details, such as claim deadlines and reimbursement limits, can save you from potential issues down the road. If you have any doubts, contact your credit card issuer for clarification.

Documenting Your Purchases

Keep records of all your purchases made with the card, including receipts, warranties, and other relevant documentation. This information may be required when filing a claim. Proper documentation can streamline the claims process and improve your chances of a successful outcome.

Knowing the Claims Process

Familiarize yourself with the steps involved in filing a claim. The details are usually outlined in the services guide that comes with your credit card. If you can't find the guide, check the website of the card issuer or get in touch with their customer care team. Understanding the claims process beforehand can help you navigate it more efficiently when the need arises.

Return Protection Coverage

If you need to return a purchase after the regular return period has passed, your credit card's return protection coverage may come to your aid. This coverage allows you to get a refund for the purchase even after the standard return window has closed. However, there may be certain limitations, such as maximum refund amounts per item and per year.

Purchase Protection

If an item you bought with the card is damaged, stolen, or lost within a specified time frame (usually a few months), purchase protection coverage can reimburse you for the purchase price. In some cases, you may need to first file a claim with your primary insurer or provide a police report. This coverage is especially useful if your item is lost or stolen, as it provides an additional layer of financial protection.

Price Protection

Price protection is a valuable but rare benefit. If you buy an item and then find it advertised for a lower price shortly afterward, your credit card may refund the difference. This benefit can save you money, especially on big-ticket purchases or during times when price drops are common. However, it requires you to monitor price changes diligently.

Extended Warranties

Using the right credit card to make a purchase can protect you if the product breaks down after the manufacturer's warranty expires. Some cards offer extended warranty protection, which may either replace the item or reimburse you for the cost. This benefit can save you from unexpected expenses and provide peace of mind when making expensive purchases.

Cellphone Protection

With smartphone prices soaring, cellphone protection is a welcome feature. By paying your cell phone bill with a card that offers this coverage, you can rest assured that you'll be reimbursed for damage or theft of your phone. This protection is often more comprehensive than a standard warranty and can save you from costly repairs or replacements.

Travel-Related Protections

Credit cards may also offer a range of travel-related insurance benefits, such as rental car collision insurance, travel accident insurance, trip cancellation insurance, trip delay insurance, and baggage delay insurance. These protections can provide financial relief and assistance in case of unexpected events during your travels, such as accidents, cancellations, or lost luggage.

Additional credit card perks

Credit cards offer a wide range of benefits, including liability protection, cash backs, and reward points. However, some additional perks are often buried in the fine print. Here are some additional credit card perks that you may not be aware of:

• Emergency travel assistance: Many credit cards provide emergency travel assistance services if you get sick, injured, or face legal issues while travelling. This can include medical, legal, and transportation assistance, help with replacing lost items like eyeglasses, passports, or prescriptions, and even sending messages to your family in an emergency.
• Roadside assistance: Some credit cards offer roadside assistance if your car or rental car breaks down or runs out of gas. This can include basic services such as towing, winching, lockout assistance, or fuel delivery. Visa cards, for example, offer Visa Roadside Dispatch, which provides standard service calls at a flat fee. Premium cards may offer more comprehensive roadside assistance benefits.
• Access to special events: Certain credit cards provide exclusive access to preferred seating or pre-sale tickets for concerts, sporting events, plays, or elite experiences such as gourmet food or wine tastings.
• Concierge services: Some credit cards include concierge services that can assist with trip planning, making reservations at restaurants, booking tickets for events, and even helping to buy and ship gifts.
• Extended warranty protection: Many credit cards offer extended warranty protection, which can add an extra year or two of protection to the standard manufacturer's warranty. This benefit is often more comprehensive than optional policies sold by stores and is included in many credit cards at no extra cost.
• Return protection: This benefit allows you to return items after the standard return period has passed. Some credit cards may offer refunds for purchases made with the card, even if the retailer's return period has ended.
• Purchase protection: If an item purchased with the credit card is damaged, stolen, or lost within a certain time frame (usually a few months), purchase protection can reimburse you for the purchase price. This can provide added peace of mind when making expensive purchases.
• Price protection: Some credit cards offer price protection, which means they will refund the difference if you find the same item advertised for a lower price within a certain period after your purchase (usually 30 to 120 days). This benefit can save you money, especially on big-ticket items.
• Cellphone protection: With smartphone prices soaring, cellphone protection is a valuable perk. By paying your cell phone bill with a credit card that offers this benefit, you can be reimbursed for damage or theft of your phone.

Frequently asked questions