Credit Cards have significantly changed the way we spend, offering both convenience and a range of perks. From exclusive lounge access to cashback rewards, there’s a Credit Card for every need. However, one essential yet often overlooked feature is Credit Card Insurance. This benefit can provide valuable protection against unforeseen events like card theft, fraud, or even travel disruptions. When selecting a Credit Card, look beyond the perks and ensure you choose one that includes Credit Card Insurance for peace of mind and added security.
What is Credit Card Insurance?
Credit Card Insurance is a protective feature offered by Credit Card providers to safeguard cardholders against various financial risks. This insurance can cover situations such as the loss or theft of your Credit Card, fraudulent transactions, and even specific emergencies like travel disruptions or health issues during trips.
In some cases, Credit Card Insurance may also provide coverage for accidental death or disability, helping to relieve financial burdens on families. By including this insurance, Credit Cards add an extra layer of security, ensuring you are financially protected from unexpected events.
How does Credit Card Insurance work?
Credit Card Insurance works by providing coverage or reimbursement in case of specified incidents. For instance, if your Credit Card is stolen or used fraudulently, this insurance can cover the losses up to a certain limit, as defined by the provider. In the event of a travel emergency, such as trip cancellations or medical issues, Credit Card Insurance may reimburse you for related expenses, depending on the card’s terms.
Claims typically involve submitting proof of the incident, like police reports for theft or hospital bills for medical emergencies, allowing you to receive financial compensation for losses incurred.
Different types of credit insurance
Let’s look at the different types of insurance available on credit cards
1. Credit Insurance
Credit Cards are mainly used as an alternative payment option that allows you to pay for your purchase later.
Sometimes, you might face unexpected situations such as a job loss, being involved in an accident, or sudden
disability.
A few Credit Card companies offer complimentary credit insurance on some of their Credit Cards, whereas some charge a
monthly fee for this coverage. This insurance comes to your rescue during such unforeseen events, helping you settle
your dues and ensuring your credit rating does not take a hit.
2. Zero-liability cost cover
Losing your credit card can be very stressful, as anyone can misuse the card for fraudulent transactions. In such
situations, the zero-liability cost cover protects you and ensures you are not liable for fraudulent transactions on
your credit card. However, such coverage is usually only applicable in cases where the OTP/PIN/Password has not been
compromised by the customer.
3. Travel Insurance
Travelling is not always smooth; sometimes, flight cancellations or delays occur for various reasons. Few card
issuers offer insurance coverage against situations like:
- Baggage delay/loss / stolen
- Loss of passport/travel documents
- Air accident
4. Air Accident Cover
Most credit cards offer life
insurance in the case of loss of life due to an air accident. To avail of the benefit, you must submit your
insurance nomination form to the bank.
5. Purchase protection
Some cards offer protection against fire or burglary within 90 days of purchases made on the credit card and if the
fire is in the residential premises of the cardholder. Jewellery and perishable commodities are not covered in this
insurance.
Many banks also offer insurance on document replacement, rental cars and accidents. The insurance offered works just
like any other insurance product.
Credit Card Insurance: Features & benefits
- Fraud protection: Covers unauthorised transactions in case your Credit Card is lost or stolen, helping you avoid unexpected expenses due to fraudulent activities.
- Purchase protection: Reimburses you for items bought with your Credit Card that are damaged, lost, or stolen within a specified period, providing security for your valuable purchases.
- Travel insurance: Offers coverage for travel-related emergencies, including trip cancellations, lost luggage, and medical expenses while abroad, giving you peace of mind on your journeys.
- Accidental death & disability coverage: Provides financial support to the cardholder’s family in case of accidental death or disability, easing financial burdens during difficult times.
- Extended warranty: Some Credit Cards offer extended warranties on purchases made with the card, protecting against product defects after the manufacturer’s warranty expires.
- Peace of mind: Credit Card Insurance ensures that you’re financially protected against unforeseen events, allowing you to enjoy the benefits of your card with confidence.
Conditions to keep in mind
Most cards have conditions that should be met to avail of the insurance coverage.
- For instance, in case of air accident cover, the sum insured will be paid only provided the cardholder has
performed at least one POS transaction 90 days before the accident and if the air ticket has been booked using
that card. Also, the bank must be informed of the accident within 30 days of the event and the required
documents must be submitted within 90 days of the incident.
- Similarly, card protection insurance may be available only if a transaction (purchase/EMI/payment transaction) is
made at least once within 90 days before the occurrence of the incident, for which the claim is being made.
Inactive cards and cards that are overdue for payment will not qualify.
Also Read: Your
debit, credit cards have inbuilt personal accident, air insurance covers
Conclusion
Credit Cards are a blessing in times of financial crisis. However, you must keep your credit cards secure to avoid
misuse. Remember never to share or compromise your secret credentials like PIN/OTP/Password, avoid clicking on
suspicious links and always use the customer care number mentioned on the Bank’s official website. Credit Card
Insurance is one such way of ensuring peace during chaotic scenarios.
FAQs
Is there any insurance on Credit Cards?
Yes, many Credit Cards offer insurance as a built-in feature, providing cardholders with financial protection against theft, fraud, and certain travel-related incidents. This insurance helps secure your transactions and offers added benefits, making Credit Cards a safer payment option.
What does Credit Card Insurance cover?
Credit Card Insurance generally covers unauthorised transactions, purchase protection for damaged or stolen items, and travel-related incidents like trip cancellations, lost luggage, and medical emergencies. Some policies may also include accidental death or disability coverage, offering comprehensive protection in a variety of situations.
Who buys Credit Card Insurance?
Credit Card Insurance is typically valued by frequent travellers, online shoppers, and individuals looking for added security against theft or fraud. Those who seek peace of mind and financial protection for purchases and travel emergencies often find Credit Card Insurance a worthwhile benefit.
Disclaimer: This article is for information purpose only. The views expressed in this article
are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd.
and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader
for taking any financial decisions based on the contents and information. Please consult your financial advisor
before making any financial decision
