7 Hidden Insurance Benefits Of Credit Cards

By BankBazaar | November 10, 2016

7 Hidden Insurance Benefits Of Credit Cards

Imagine this: It is almost the end of the month and you are struggling to keep your head above water, praying for payday to arrive to save you from your financial woes. Just when you are rummaging through your jeans pocket before tossing it into the laundry, you accidentally find a few hundreds. We bet that would have made you feel pretty wonderful!

What if we told you that your Credit Card can make you feel just as wonderful, but in ways you never expected? A Credit Card is a gift that keeps on giving. Whether it’s shopping or paying bills, you can always rely on a Credit Card when you are short of cash, enjoy the rewards it offers, or simply to enhance your lifestyle. But, not many know that Credit Cards have hidden Insurance benefits too. While people spend a lot on purchasing Insurance and paying premiums, you can enjoy the benefits of Insurance for free thanks to your Credit Card.

Depending on the Credit Card provider and the type of card owned by you, your Credit Card can provide multiple Insurance covers. You can find details about these insurance benefits in the service guide provided to you along with your Credit Card welcome kit. Without any further delay, we present some lesser-known Insurance benefits that Credit Cards have to offer:

  1. Credit Insurance: Accidents are always unexpected. In case of an accidental death, Credit Insurance waives off outstanding balances of up to Rs. 50,000 on your Credit Card. It should be noted that this amount differs from one Credit Card company to another. If the Credit Card is not active, then the death certificate needs to be provided along with the claim.
  1. Rental Car Insurance: Consider that you are renting a car and have opted not to pay for the Insurance offered by the car company. Unfortunately, due to an ill-fated collision, the car has suffered substantial damage. Instead of paying the cost of the damage to the car company out of your pocket, you can claim for Rental Car Insurance that covers any damage to the car as long as you have paid for the rental car with your Credit Card. However, theft of valuables kept in the car, as well as personal injuries, are not covered by this Insurance. Also, damages to other vehicles are also excluded from the Rental Car Insurance Claim.
  1. Personal Accident Insurance: With the increasing number of accidents taking place, it would be wise to take out a Personal Accident Insurance policy. However, through Personal Accident Insurance provided by Credit Cards, you can claim an amount ranging from Rs. 2,00,000 to Rs. 4,00,000 in case of injuries or death due to road accidents. In case of air mishaps, the same Insurance provides a cover of Rs. 10,00,000 to Rs. 40,00,000. It should be noted that the cover amount is likely to differ based on the type of Credit Card you own as well as the Credit Card provider.
  1. Trip Cancellation Insurance: We all hate it when we have to cancel trips due to some unforeseen emergency that has cropped up. Whether it has to do with a sudden illness or family problems, there are umpteen reasons why travel plans end up getting cancelled at the last minute. What this means is you will probably lose a fair amount of money on non-refundable flight tickets. But, if you had booked your tickets using your Credit Card, then Trip Cancellation Insurance reimburses the loss incurred due to non-refundable flights. However, it should be noted that such insurance benefits are rarely provided with Credit Cards. Also, this Insurance does not cover trip cancellations due to weather turbulence or pre-existing illness.
  1. Lost Baggage Insurance: It is really annoying and frustrating when you lose your check-in baggage due to theft or negligence on the part of the airline company. To help you recover from such losses, Credit Cards provide Lost Baggage Insurance if you don’t receive your luggage within 48 hours of your arrival at your destination. You can enjoy this Insurance benefit only if you have booked the flight tickets using your Credit Card.
  1. Mobile Phone Replacement Insurance: One of the rarest Insurance benefits provided by Credit Cards is Mobile Phone Replacement Insurance. If your phone has been stolen or damaged, then Mobile Phone Replacement Insurance provides claim cover up to the purchased cost of the phone. Needless to say, you can enjoy this Insurance benefit only if you have purchased you mobile phone using your Credit Card.
  1. Purchase Protection: One of the most common Insurance benefits provided by Credit Cards is Purchase Protection which insures products that you’ve bought using your Credit Card from loss or damage due to fire or theft. Purchase Protection provides cover of up to Rs. 50,000 for 180 days after the date of the purchase. However, the Insurance cover amount as well as the period of protection, differ from one Credit Card company to another.

There are a number of other Insurance covers provided by Credit Cards for events like flight hijacking, loss of passport, etc.

In case of accidental death, the following documents should be provided for claims settlement of Credit Card Insurance:

  • Notice of death of the Credit Card holder needs to be provided to the Credit Card company within 30 days from the time of death. An elaborate description of the accident should be provided in the notice
  • Death certificate, FIR, medical examination report, and post-mortem report should also be provided along with the claim within 60 days from the time of death. If any document is not in English, then it should be translated into English and notarised before submission.

Drawbacks of Credit Card Insurance:

  1. Insurance benefits of Credit Cards are considered as secondary cover and can only be claimed once the primary cover i.e. Car Insurance, Health Insurance has been exhausted.
  2. Also, it is generally considered difficult to get a claim settlement through Credit Card Insurance, due to the numerous disclaimers and fine print clauses mentioned in the service guide.
  3. These Insurance covers provide benefits only to primary active Credit Card holders. A person who has used his or her Credit Card to shop, pay bills or withdraw money at least 5 times in 89 days prior to the day of accident/mishap is considered to be a primary active Credit Card holder.

Now that you know all about the Insurance benefits Credit Cards can offer, don’t forget to carefully scrutinise these benefits when choosing a card. And don’t forget to carefully read the fine print!

Note: We know it’s exciting to find out about the Insurance benefits of a Credit Card. However, experts advice says- don’t rely solely on these Insurance covers as they are difficult to claim and not sufficient to ensure the well-being of your family and loved ones. Always choose primary covers like Life Insurance, Car Insurance, Health Insurance etc. over Credit Card Insurance.

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