In some cases, insurance is necessary. Life insurance, for example, is one of those types of insurance that it is probably a good idea to have. However, there are other types of insurance that you don’t need. ID theft insurance? Not exactly necessary. And another of those unnecessary types of insurance is credit card insurance.

What is credit card insurance?

The idea behind credit card insurance is that if you are unable to make payments, the insurance will kick in and take care of your credit card balance (up to a certain amount, of course). However, credit card insurance is often redundant, and sometimes downright unnecessary.

Credit card loss protection. This is protection that keeps helps you cover if your credit card is lost or stolen. The pitch is that it will pay for those erroneous charges. The problem with that is that the law limits your credit card (NOT debit card) liability to $50 for fraudulent charges.

Credit card life insurance. The pitch is that if you die, the insurance will cover your credit card balance, leaving any others on the account free from debt. However, you are better off to get a good term life insurance plan in an amount that will more than cover all your debt.

The same is true for disability. Disability insurance should cover these problems, and Workers’ Comp will help you out if you are disabled through work. Of course, the best thing to do is to build an amount to go to an emergency fun into your budget so that you can make credit card payments for a few months if something untoward should happen.

Tags: insurance, personal finance, financial planning, finances,
financial goals, types of insurance, credit card insurance, unnecessary insurance