Pay Insurance or Credit Card Debts First?
July 28th, 2011 by instut
When it comes getting your monthly debts under control one of the things that many people look at is whether they should pay their insurance premiums or credit card debts first. This is an argument akin to a double edged sword. The truth is that both of these items are vitally important to the overall financial security ones needs in life. Credit card debt can skyrocket out of control very fast if left unchecked, insurance however is a necessity that you must have in order to protect your health, home, family and property. So, which is it? Do you pay insurance or credit card debts first?
The simple fact is there is not an easy answer to this question; each person will have to look at this according to their own individual situation. In general, it’s probably a better idea to make sure that your insurance is paid as a lapse in your premiums will lead to the suspension of your coverage and possible the cancellation of your policy. This is not good as you will have no protection in the event of accidents or calamities. If it is in your mind that you can simply take the chance now and will get coverage again after your debt situation is in a better condition, thin about this, the cost of your monthly premiums are usually only 1/4 of the cost of getting new coverage established and often there is a buildup period of anywhere from 30-45 days (or in some cases even longer) for new insurance coverage to be in full force. Is it worth the extra cost and the risk of being without coverage for an extended period of time just to save the cost of your premiums now?
You should also bear in mind that you may not be able to easily get coverage down the road. In many cases the company that you dropped the policy on will not issue you a new policy as they now feel that you are untrustworthy to meet your obligations to them. They may even post your information to an industry database which could make it difficult to get coverage with any national firm, as you will be seen as a risk in terms of staying current with your premiums.
You can see that there are several good reasons to choose to pay your insurance first. While you may at first be intimidated by the throught of your credit card debt getting even bigger, the truth is that it is not going to go away by merely applying the cost of your insurance premiums one time. What will happen is that you will not have the insurance that you need in the event of an unforeseen emergency, which will leave you with much bigger problems than dealing with credit card debt.
Is Credit Card Insurance Worth It?
November 22nd, 2009 by instut
The banks are always looking for new ways to make money. Over the past several years, one of their newest services is offering insurance to credit card account holders. This program varies bank by bank, but they typically work like this: for around 1% of your monthly spending, you can supposedly protect yourself in the event of death, job loss, or major medical catastrophe. This sounds like a good offer, right? Well, once you dig deeper, you will discover these credit card deals really aren’t a deal at all.
A Closer Look
Let’s take a look at the “Payment Protector” plan which is currently offered on Chase cards. They charge 89 cents per $100 of your monthly statement balance. That works out to be 9/10 of 1%, so for the sake of simplicity, let’s round that up to 1%.
For an extra fee of around 1% added on to all your account spending, Chase says they will defer your payments for up to 2 years for a disability, hospitalization, or if you lose your job; 4 months for a baby or marriage; and 1 month during one federal holiday per year.
This may sound attractive, but you need to realize that you are still responsible for paying that money back. All they are offering is to defer your payments if those things happen. But if you read the fine print, you will realize there are a lot of hoops to jump through in order to qualify… even if you do lose your job or have a disability. Your case has to meet their strict definition of those.
Credit Card Reviews? Thumbs Down!
All you have to do is read user’s credit card reviews of these insurance plans on the internet forums and message boards and you will see there are a ton of unsatisfied users. Simply put, they feel it’s just too expensive of a service. When you add up paying a 1% surcharge every month, that equals a lot over a period of twelve months.
Are The Any Worthwhile Benefits?
There’s only one benefit which appears worth while, but only for some people. It’s the death benefit; in the event you naturally die, they will pay off your balance, with a typical maximum of $10,000 to $25,000. For most people, this doesn’t make sense. However, it ma be worthwhile for certain higher risk categories of people (like senior citizens) who carry a large balance.
Insurance Contracts
July 24th, 2009 by instut
There might hardly be a person who does not have an insurance of some kind. We have all done it at some time or another. It can be anything from a car insurance, health insurance, home insurance to a travel insurance. All of us have paid lots of money to insurance companies to get that peace of mind that only the knowledge of being insured can bring. Nevertheless, not all of us actually understand the insurance contract that we have signed.
Any new and fresh insurance contract document contains a lot of complex contractual terms and legal provisions. You might never find such complexities in one place anywhere else. Insurance agencies spend tons of money paying lawyers and professionals to come up with updated and amended terms of contracts that cover all possible eventualities.
On the other hand, you have had may be less than a day to take a glance at your contract details and look over the important points that the insurance agent has so kindly highlighted for you.
Nevertheless, you should make sure that you understand this contract up to a reasonable extent at least, if not fully. The basic foundation of all such insurance contracts is the same. They have the same aim and their methods are also similar.
They take the risk of a certain event that might or might not occur, agreeing to pay the expenses in the case that it does occur. Now, this event can be anything, the most common being car accidents, medical treatment, house damage and similar events.
Now, life assurance comes around as slightly different here. It gives you a guarantee of paying after you pass away, which again is an eventuality. Nevertheless, the time at which your death may occur is not certain and hence, the risk is quite real that you die at such a stage of your life when your spouse or your children solely depend upon you.
Apart from that, there should be certain financial cost attached to the event. The insurer should be able to estimate the expense of the loss or damage reasonably. They should be able to do this so that they can calculate the cost of your premium.
Thus, although you will be able to recover any lost wages, medical expenses through insurance, you will not be able to recover the pain, suffering, loss of a loved one under such a contract.
You should keep your eyes open regarding what events are covered in your contract. Besides that, you should know when the policy or plan will pay out as well as the events that they do not cover. There will also be certain conditions and terms that you have to follow in order for the insurance to be valid. Check that out too. Ensure that you understand your contract before signing it.
