Credit card protection insurance is another case of paying too much in premiums for very little protection. Many people signing up for this expect that it will pay off their credit card if they lose their job or become too sick to work.
The truth about credit card protection insurance is that it will only pay the minimum payments, and often only for up to one year. As far as the coverage for illness, you will not be covered if you already have the condition when you sign up. The cost for this insurance can be as high as 1.5% of your credit card balance.
This past February, CBC’s Marketplace conducted a poll through EKOS. These are some of the interesting findings:
- 23% with credit balance insurance say they weren’t given full disclosure when it was sold to them.
- 22% with the insurance say it was never explained the policy was optional.
- 51% with the insurance say it was never explained that policy would not pay their entire balance if they lost their job or fell ill.
- 56% with the insurance said it was never explained the insurance wouldn’t cover pre-existing medical problems
While it is a good idea to make sure your minimum payments are covered for times when you’re unable to pay them, you would likely come out ahead by using the money paid on premiums to fund a emergency savings fund.
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