 Posted: Tue May 10, 2011 4:49 pm Post subject: |
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| Quote: | | It helps protect your account in the event you fail to make payments over a consistent period of time. |
Not true. Credit card insurance comes in two forms: Credit life and credit disability. Both are issued as group coverage to the credit card issuer who is the beneficiary. Simply failing to pay one's balance does not allow the creditor to collect on the coverage.
If you accept their offer to pay for the coverage they already pay for, you will be paying an exorbitant amount of money for the "protection." Something in the vicinity of $0.80-$1.00 (or more) per $100 of account balance PER MONTH for credit life. If your balance is $5000, and your rate is $0.80/$100, that means a cost of $40 per month for $5000 worth of insurance.
$40 per month could buy $1,000,000 of term life insurance for many persons under age 35. With that, you could die, pay off the card balance, and leave $995,000 to someone you really cared about.
Consider this: If no one else (like a parent or spouse) is obligated to your debt, when you die, your debt goes to the grave with you. It becomes uncollectible, which is why the card issuer buys the insurance anyway. To get you to pay for it simply increases their profit on your account.
Some credit disability policies also have a benefit for involuntary loss of employment, and will make your minimum monthly payments for up to 12-24 months. They won't pay simply because you choose not to.
Most of us as agents would counsel AGAINST credit card balance protection and urge you to consider honest-to-goodness life insurance and, possibly, disability insurance, for your larger needs.
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CA-licensed P&C Broker-Agent and Life Agent. CA Insurance Lic #0596197. Now investigating insurance company abuses, and providing litigation support and expert witness services. Send me your questions, and I'll send you my answers. |
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MaxHerr
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