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Why You Need Credit Insurance

When purchased with your credit card account, credit insurance not only covers any new purchases you make with your card while the policy is in effect but also some payments for balances that existed before applying for coverage on these accounts. Credit insurance pays outstanding finance charges and late fees when covered borrowers lose their jobs through no fault of their own. If you become disabled from an accident or illness and have been unable to work for two months or more, credit insurance also provides some coverage.

Credit insurance is an optional purchase that you make on your credit card account when you apply and qualify for new purchases or an increase in your line of credit.

This product generally costs between $6 and $12 a month. Not all creditors offer credit insurance, but many do – significantly larger banks and trust companies that issue many credit cards or charge higher interest rates on loans.

Credit insurance is not the same as purchasing life insurance in conjunction with your credit card account to cover outstanding balances if you pass away before they are paid off. Some issuers may offer this type of policy, but it’s scarce. The likelihood of this happening is slim because most people die after paying off their balance–not before.

Purchasing this coverage provides much-needed peace of mind when making major purchases or transferring balances. Although it’s implausible that you’ll ever need the benefits, the peace of mind gained by knowing this coverage is available if necessary can be priceless.