Should You Get A Premium Credit Card For Its Insurance Cover?

Different issuing companies extend different insurance covers to certain credit cardholders. If you are considering getting a premium credit card to avail of its insurance benefits, it is important to first understand and compare the varied offerings of various companies, then decide if you actually require them.

Credit life insurance (Accidental death insurance)

In the unfortunate event of the cardholder’s accidental demise, the insurance company waives off the outstanding payment on his/her credit card account. The cover amount depends on the credit card type and the credit card company.

In case of accidental death, the beneficiary usually gets an insurance cover ranging between Rs 2 lakhs and Rs 40 lakhs. For road accidents, this cover usually ranges between Rs 2 lakhs and Rs 4 lakhs, and for death due to air accident, the cover ranges from Rs 10 lakhs – Rs40 lakhs.

To claim this benefit, the insurance company must be informed within 30 days of the cardholder’s death.
The claim must be filed within two months of the accidental death – the cardholder’s death certificate and other required notarized documents must be submitted along with the claim form.

Drawbacks:

• Any outstanding amount on the credit card is deducted from the claim settlement amount
• Not entirely dependable for life insurance as it only covers accidental death and rules are stringent

Credit disability insurance

With this insurance, if the cardholder becomes medically disabled, the insurer takes on the responsibility to pay his/her monthly minimum payments. However, there is a defined period during which the payments are made and additional spends after the disability are not covered.

Involuntary unemployment credit insurance

In this case, the cardholder’s minimum monthly payments are taken care of if he/she loses their job/is laid off. Spends after the involuntary unemployment are not covered.

Lost baggage insurance

This includes insurance coverage for checked-in baggage lost or stolen during international and domestic flights. The cover comes into effect if the baggage is not found even after 48 hours of arrival at the destination. The cover amount differs as per the issuing company.

Zero lost credit card liability

This cover translates to zero liability in the event that the cardholder loses his/her credit card. This comes into force after the cardholder reports loss of card to the respective authorities. Before reporting the loss, the cardholder remains liable for any charges incurred on the credit card (may vary as per bank).

Purchase protection

Some credit card companies offer free purchase protection cover. When any tangible goods are bought using the credit card, the goods are insured against loss or damage during transportation, due to theft, fire or other incidents as specified in the company’s policy. This cover is usually provided for a period of 90 to 180 days from the date of purchase – Indian Overseas Bank limits this to purchases made in the last 30 days. The timeframe and claimable amount vary from insurer to insurer. Depending on the card, the cover limit usually ranges between Rs 25,000 and Rs 5 lakhs per annum (specific amount is mentioned in the welcome kit).

Axis Bank offers this kind of cover on limited premium credit cards such as Signature and Infinite. Standard Chartered Bank insures card purchases through the Plus Extended Protection Plan (PEPP).

To make sure you reap the benefits of purchase protection cover:-

• Settle outstanding dues on time. In select cases, banks hold the insurance claim proceeds in escrow account till all outstanding payments on the card are cleared
• Make sure you swipe the credit card on your bank’s brand machine while making the purchase
• If your credit card is inactive, i.e. there are no transactions on the card 30-90 days (period varies as per issuers) after you made the purchase, the purchase protection cover will not be available
• Check your bank’s minimum spend limit. For ICICI cards, minimum Rs 499 must be spent in the past month for the card to remain active
• Goods purchased should be present at the same address the cardholder registers with the bank – if the cardholder stays at a different address than what is registered, the claim is disallowed
• For theft claims, the product(s) purchased should be stolen from your home

Caveats

While some of the aforementioned credit card insurance benefits are free through out, some companies offer free services for a specific period and levy exorbitant charges later.

Another caveat is that most of these benefits are available only for primary active credit card holders. For the purpose of insurance cover claims, a primary active credit cardholder is one who has used the card minimum five times for cash advance transactions and/or customer initiated purchases within 89 days prior to the event occurrence.

Insurance cover benefits offered by some premium credit cards

Credit card	Insurance benefits offered
Axis Bank Signature Credit Card	Comprehensive insurance cover worth Rs 2.55 crores, including Air Accident Cover (Rs 2,50,00,000), Purchase Protection (Rs 1,00,000), Lost Card Liability (Rs 3,00,000) Travel related covers: Loss of Travel Documents $ 300, Check-in baggage loss – $ 500, Check-in baggage delay – $ 300
American Express Gold Card	Zero Lost Card Liability: Maximum liability of only Rs 1,000 before reporting the loss, Nil liability after reporting Emergency Card Replacement Dispute Resolution
HDFC Regalia Credit Card	Air Accidental death: For death in an air accident, the nominated kin receives Rs 1 crore compensation Emergency Overseas Hospitalisation: Protection worth up to Rs 15 lakhs against any medical emergency when the cardholder is travelling outside the home country
SBI Platinum Corporate Card	Covers the organisation’s corporate card liability against frauds by employees Insurance valid on international and additional factor authenticated online transactions Hassle-free, customer-friendly claim settlement process
Standard Chartered Visa Infinite Card	Complimentary travel and medical insurance up to USD 200,000 whenever the cardholder travels overseas

Concluding

Apart from the above, certain credit cards offer additional covers like passport loss, hijack, etc. Some cards offer insurance cover to the cardholder and the card issuer in case of the cardholder’s demise. Always read the fine print carefully to understand the varying conditions and limits between different cards and companies.

You need to assess if taking a premium credit card for the so-called complimentary insurance is actually of real value to you. This ensures you do not end up paying for something not really necessary in your case.

It is best to evaluate your current and future financial needs and life situation, then take a call how valuable the complimentary credit card insurance will be for you.