Credit Card Life Insurance: What Coverage Do You Get?

Credit cards offer a range of benefits, including cashback, reward points, and insurance. The type of insurance coverage provided by a credit card varies, with the most common type being personal accident insurance. Credit cards may also offer insurance against fraudulent transactions and theft, as well as purchase protection insurance, which covers items bought with the card in case of loss or damage due to theft or fire. Some cards also provide lost baggage insurance, which offers protection against the loss of checked baggage during travel. While credit cards can provide peace of mind through these insurance benefits, it's important to carefully review the specific coverage, exclusions, and limitations offered by your card.

Credit cards that offer life insurance

Credit cards offer a range of benefits, including insurance products that can be a lifesaver during emergencies. While credit card insurance is becoming less common, some cards still offer this benefit.

Credit card insurance typically covers either product purchases or travel-related purchases. Here are some of the key types of credit card insurance:

Return Protection Coverage:

Allows you to return a product after the return period has passed and receive a refund.

Purchase Protection:

Reimburses you for the purchase price if an item bought with the card is damaged, stolen, or lost within a certain time frame (usually a few months).

Price Protection:

Refunds the difference in price if you find the same product advertised for a lower price elsewhere within a specific time frame.

Extended Warranties:

Protects you if a product breaks after the manufacturer's warranty expires, either by replacing the item or reimbursing the cost.

Cellphone Protection:

Reimburses you for damage or theft of your phone if you pay your cell phone bill with the card.

In addition to these product-related protections, there are also several travel-related insurance benefits offered by some credit cards:

Rental Car Collision Insurance:

Covers the cost of damage to a rental car, eliminating the need for pricey add-on insurance from rental companies.

Travel Accident Insurance:

Provides a payout to you or a beneficiary in case of death, dismemberment, or disability resulting from a trip paid for with the card.

Trip Cancellation Insurance:

Reimburses you for non-refundable prepaid travel purchases made with the card if your trip is cancelled due to illness, emergency, severe weather, or other covered causes.

Trip Delay Insurance:

Covers resulting expenses such as meals, transportation, and lodging if your trip is delayed due to covered causes like cancelled flights or lost passports.

Baggage Delay Insurance:

Reimburses you for clothing and toiletry purchases made while your luggage is delayed or missing.

While these insurance benefits are valuable, it's important to carefully review the terms and conditions of your credit card agreement. Most policies have exclusions and limitations, and understanding the specifics can help you maximize your coverage.

Additionally, it's recommended to have separate life insurance like term insurance, as most credit cards only offer personal accident insurance, which has limited coverage.

• ICICI Bank Diamant Credit Card
• HDFC Bank Credit Card
• Axis Bank Privilege Credit Card
• Citi Prestige Credit Card
• Canara Bank Credit Cards (Visa and MasterCard)
• Etihad Guest Premier Card from SBI
• Canara Bank Credit Card (Global Gold)
• Vistara Signature Axis Bank Credit Card
• MoneyBack Credit Card from HDFC Bank
• ICICI Bank Rubyx Credit Card

Credit card insurance benefits

Credit cards offer a wide range of benefits, from building your credit history to earning rewards on purchases. But one often overlooked advantage is the various types of insurance that they provide.

The specific insurance benefits that come with a credit card can vary, so it's important to check the details of your particular card. However, here is a list of some of the most common types of insurance offered by credit cards:

• Purchase protection insurance: This covers eligible products purchased with your card that are lost, stolen, or damaged within a certain time frame, usually a few months.
• Return protection insurance: This benefit covers items that a merchant will not accept for return. There is usually a maximum dollar value per item, and you may have to send the item to the credit card company.
• Extended warranty protection: This insurance adds more time to the manufacturer's warranty, often an additional year or more.
• Cell phone protection: This covers damage and theft of your mobile phone and is often more comprehensive than a standard warranty.
• Price protection: If you find a lower price for an item you purchased with your card, this insurance will refund the difference.
• Rental car insurance: This covers damage or loss to a rental car. Primary rental coverage is best, as it provides coverage without needing to file a claim with your personal insurance company first.
• Travel accident insurance: This provides coverage for medical expenses or loss of life if you or a travel companion are injured or killed during a trip paid for with the card.
• Trip cancellation/interruption insurance: This insurance covers non-refundable travel expenses if your trip is cancelled or interrupted due to covered reasons, such as illness or severe weather.
• Trip delay reimbursement: If your trip is delayed by a certain amount of time, usually six hours or more, this benefit will reimburse you for reasonable expenses incurred during the delay, such as meals or hotel stays.
• Lost luggage reimbursement: This insurance provides reimbursement for checked or carry-on luggage and its contents if they are lost due to theft or misdirection by the airline or other common carrier.

In addition to these shopping and travel insurance benefits, credit cards may also offer other perks such as roadside assistance, emergency assistance services, and concierge services. It's important to note that most credit card insurance is secondary to any other insurance you may have, and there may be exclusions and limitations to the coverage. Be sure to read the fine print and understand the specific benefits and limitations of your credit card to take full advantage of the insurance offerings.

Credit card insurance costs

The cost of balance protection insurance, which pays out the outstanding balance on a credit card or makes monthly payments on the cardholder's behalf in the event of unforeseen circumstances, is typically about 99 cents (plus taxes) per $100 of the average daily credit card balance. For those aged 66 or older, this decreases to 59 cents per $100.

Credit card insurance that covers product purchases can include return protection coverage, purchase protection, price protection, extended warranties, and cellphone protection. Travel-related insurance can include rental car collision insurance, travel accident insurance, trip cancellation and interruption insurance, trip delay insurance, and baggage delay insurance.

While credit card insurance is a valuable perk, it's important to note that it shouldn't be the sole reason for choosing a particular credit card. Additionally, credit card insurance usually has lower limits than standalone policies, and it's essential to understand the exclusions and limitations of the coverage.

Credit card insurance alternatives

Credit cards can provide a range of insurance benefits, but these vary from card to card. It's important to read the fine print to understand what you are and aren't covered for.

Travel insurance

If you're looking for travel insurance, you may not need to rely on your credit card. There are many companies that offer travel insurance as a standalone product. This can be a good option if you want more comprehensive coverage or if your credit card doesn't offer travel insurance.

Life insurance

Most credit cards only offer personal accident insurance, which covers accidental death or dismemberment. If you're looking for more comprehensive life insurance coverage, you may want to consider a separate life insurance policy. This can provide financial protection for your loved ones in the event of your death, regardless of the cause.

Health insurance

Credit cards may offer limited medical coverage for travel-related injuries or illnesses, but this is typically not a substitute for a comprehensive health insurance plan. If you're concerned about medical expenses, consider enrolling in a health insurance plan that fits your needs.

Home or rental insurance

Credit cards may offer some protection for lost, stolen, or damaged items purchased with the card, but this coverage is usually limited. If you're looking for more comprehensive protection for your home or rental property, consider purchasing a separate insurance policy.

Auto insurance

Some credit cards offer rental car insurance, but this coverage may be secondary to your personal auto insurance policy. If you're looking for primary rental car insurance or more comprehensive coverage for your vehicle, consider purchasing a separate auto insurance policy.

Other types of insurance

Depending on your needs, you may want to consider other types of insurance that are not typically covered by credit cards, such as disability insurance, critical illness insurance, or business insurance. It's important to assess your individual needs and choose the types of insurance that best fit your situation.

Credit card insurance exclusions

Credit card insurance typically covers either product purchases or travel-related purchases. However, there are several exclusions to be aware of.

Exclusions

• Nuclear risks or contamination due to a radioactive substance.
• Customer disputes with the buyer that may result in the withholding of partial or full payments by the buyer.
• Interest accrued after the original due payment date.
• Debt owed by a government entity—these cannot usually be declared insolvent.
• Currency fluctuations, reverse factoring policies, and pre-shipment risks.
• Pre-existing medical conditions—these are often excluded from travel insurance.
• One-way trips—travel insurance often requires you to have plans to return to your home country.
• Certain ages—travel insurance often has maximum age limits.
• Additional insurance requirements—credit card insurance may be supplementary, meaning you must exhaust all other sources of insurance before credit card insurance will pay out.
• Rental car collision insurance—this may only cover the cash value of the rental vehicle, and you may be liable for any difference in the rental company's assessment.
• Other insurance—you should check if your personal automobile insurer and the rental company provide adequate third-party liability, personal injury, and damage to property coverage.

Limitations

It's important to note that credit card insurance is not a substitute for comprehensive life insurance. Most credit cards only offer personal accident insurance coverage, so it's recommended that you have separate life insurance. Additionally, the insurance coverage offered varies from card to card, so it's essential to read the fine print and understand the specific exclusions and limitations of your credit card insurance policy.

Frequently asked questions