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.

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.