8 Basic Insurance Cover on Credit Card
Although the demand for credit card is increasing year on year across the globe, many credit card users are still unaware of all the advantages their card offers apart from the common ones such as free money received every month with sufficient time to payback, cashback, reward points, and others.
The reason behind this is that the card users do not read the fine print that comes along with the card kit. Financial institutions are also the reason behind this, as they fail to inform customers about the different types of benefits.
In addition to the above mentioned advantages, credit card also offers free insurance coverage.
Insurance cover associated with credit cards
The contingencies included in the insurance depend on each financial institution. The most frequent are those related to accidents, travel or theft or loss.
Among the most interesting coverage are:
1) Medical Insurance: Generally covers accidents and illnesses of the credit card holder, his or her spouse and children. They also usually cover medical emergency expenses, emergency assistance or early transfer while traveling abroad.
Accident cover offers compensation for the loss of life, hospitalisation, incapacity or temporary leave, etc. The insured person may not only limit himself/herself to the cardholder, but also to others whose ticket was purchased with the aforementioned card. At the same time, although it is less frequent, any accident caused in the course of a work or daily activity may also be covered.
2) Purchase protection insurance: It is intended for those cases in which you have paid for a purchase with a credit card. For example, some compensate for theft, robbery or accidental damage suffered by things purchased using the card.
3) Insurance against theft or loss: Most credit cards offer coverage against fraud such as card cloning, use by unauthorized third parties, theft or loss. In the case of the latter, the claim is honored, if the respective bank is notified within 72 hours of the theft or loss.
4) Anti-Theft Insurance: This is another common credit card coverage provided. Insurance against theft can cover you in the event of a robbery at a ATM cash machine, by reimbursing the amount stolen.
5) Insurance against frauds: It works in a similar way to the insurance against theft or loss. Covers cloning and cards not recognized by the customer, although many times only has coverage in case of theft or loss.
6) Travel Insurance: Offers reimbursement in the event of flight delays or cancellation due to a failure, sudden or unforeseen event such as severe weather condition, war, etc.
7) Life or Death Insurance: This insurance is considered to be the most beneficial for the cardholder and his/her family and is generally intended to cover the balance of the card at the time of death. Sometimes it also includes a broader protection insurance.
8) Baggage damage or loss insurance: Usually covers total loss and partial loss of luggage.
Beware of T&C on credit card insurance
Getting a credit card is basically a contract between the cardholder and the bank. As with any type of product, it is necessary to read the clauses of the product carefully and pay attention to the small print. If you do not have the contract, you can request a copy from your bank and check the clauses.
Are credit card insurance substitutes for ordinary insurance?
This is the common doubt regarding insurance on credit cards, and broadly the answer is NO.
Although it is true that insurance on credit cards may in some cases offer additional cover that we may not have within our usual level of insurance (for example, those related to travel insurance, luggage or similar).
Obviously, the higher the level of credit card, the higher the level of insurance coverage.
Know the insurance of your credit card
The quickest way to find out about the insurance associated with your credit card is to check them within the specific conditions of the contract, i.e. review the card contract. In any case, if any problem arises, the financial institution issuing the card is obliged to provide with information about the product in a clear and easily understandable manner, so a simple consultation at its branch should be able to resolve any doubts in this respect.
Free insurance are already included in the purchase of credit cards. These costs are included in the card fees paid annually.
Hi, I am Nikesh Mehta owner and writer of this site.
I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.