subject: The Need To Insure Your Credit Card Debt [print this page] Several credit card companies provide optional enrollment plans known as payment protection plans or card protect plans to their customers. These plans offer relief to the customers who fail to make payments due to unfavorable circumstances like an extended illness or loss of job. The company provides a safety blanket to customers in exchange of a specific amount of annual payment. In majority of cases, the amount charged annually is based on the balance of customer.
During the last few years, credit card debt has witnessed a considerable increase. This has led to disastrous consequences both for the card issuers as well as card holders. Ultimately, it leads to non-payment of credit card debts thereby leading to payment defaults. Therefore, credit card companies offer payment protection plans that help them tide over defaults. Since these plans are optional in nature, it ultimately depends on the discretion of a customer.
In general, a payment protection plan offers a basic cover to the credit card holder who fails to clear his/her credit card debt due to an unexpected happening like unemployment, sickness or any other unforeseen incident. The aim of such policies is to provide financial assistance to a credit card holder if he/she loses income and fulfills the policy criteria. After a detailed research, the insurance companies have arrived at a quarterly or annual premium that is charged to the holder of a credit card. Normally, it is a certain percentage of the outstanding balance on a specific credit card, and the insurance premium is charge each month and appears on your credit card statement as a charge.
The credit card companies provide such insurance plans throughout the year. Generally, such companies abide by all the principles of insurance cover. Therefore, it may be in the interest of credit card holders to opt for such a payment protection cover.
Often, consumers are worried as to how they would cope with credit card commitments if they lose their income. This is where credit card payment insurance offers protection against such events. Such policies offer financial protection if the credit card holder loses his/her income/job and is unable to make the usual repayments. Generally, it is based on sickness, accident or/and unemployment issues. The policies can be taken out with an independent PPI provider or a credit card company. You should always ensure that you are not paying too much for the credit card insurance, and that you can actually collect under the insurance as much exclusion apply.
by: Corwin Smith
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