Everyone loves the convenience offered by a credit card. Besides providing consumers the ease of shopping now and paying later, credit cards offer an array of other benefits like cash withdrawal on ATMs, cashback or reward points for shopping, etc. One lesser-known benefit of credit cards is the free insurance cover that comes along with it.
If you go through the services guide that comes along with your credit card or check the website of the card issuers, you can find a complete list of the benefits and services offered by the card.
The best part of the insurance coverage that comes with a credit card is that the premiums for these covers are already paid by the card issuer. The cardholder doesn't have to pay any additional premiums to enjoy the coverage offered. The most common type of insurance coverage provided by a credit card is personal accident insurance.
Besides personal accident coverage, credit cards, other insurance benefits like:
Purchase protection insurance
Insurance against fraudulent transactions and theft
However, note that the insurance coverage offered varies from one card to another. Here, in this guide, we offer all that you need to know about insurance coverage provided by credit cards and ways to claim coverage.
Key Insurance Benefits offered by Credit Cards
Credit cards that offer credit insurance provide a waiver of the outstanding credit card bill payments, in case of accidental death of the cardholder. Generally, outstanding bills up to Rs. 50,000 are waived under this insurance privilege.
To avail this coverage, nominees of the cardholder have to provide a death certificate. Additionally, the insurance company may offer this benefit based on the personal accident claim made by the nominee.
In the event of the death of the cardholder, the insurance company pays the outstanding balance to the card issuer. This way, the spouse, children, and other family members of the cardholder are not affected by the outstanding payments.
Personal Accident Insurance
Most credit cards offer this benefit. If the cardholder meets with an unfortunate death due to an accident, the nominee can claim personal accident cover. The coverage amount ranges from Rs. 2 lakhs to Rs. 40 lakhs, depending on the type of card.
Generally, the coverage offered for road accidents ranges from Rs. 2 lakhs to Rs. 4 lakhs. The coverage provided for an air accident ranges from Rs. 10 lakhs to Rs. 40 lakhs.
Lost Baggage Insurance
Your credit card offers you protection against loss of checked baggage. If your card offers this coverage, you can claim up to $1200 in the event of theft or loss of checked baggage on both domestic and international flights.
Purchase Protection Insurance
Most cards offer purchase protection coverage. If this coverage is available on your credit card, any item that you purchase using the card is insured against loss or damaged due to theft and fire for 180 days from the date of purchase.
Besides the covers mentioned above, there are several other additional benefits like loss of passport, hijack coverage, and more. Additionally, all cards offer zero lost credit card liability. Under this benefit, cardholders are not responsible for any charges made using the card, after they report the loss of the card. However, note that the cardholder is liable for all expenses incurred on the card, before reporting the loss. Hence, it's highly recommended that you inform a loss of card on the Visa/MasterCard emergency assistance lines, as soon as you notice it.
Few Points to Keep in Mind, while Claiming Insurance Benefits on your Credit Card
Insurance Benefits are available only for Primary Active Cardholders
Generally, most credit card issuers allow only the primary active cardholders to claim the benefits of the insurance coverage. For insurance purposes, a primary active cardholder is a person who has used the card at least five times within 89 days of the occurrence of the event. However, note that the eligibility criteria may vary based on the card type, credit limit, and card issuers. So, make sure to read the documentation that comes along with your card for accurate details.
Be Aware of the Settlement Process
To claim any insurance benefits that come with your credit card, you need to be aware of how to file the claim. The details are found in the services guide that comes with the card. If you have misplaced the services guide, you can check the information on the website of the card issuer or get in touch with the customer care team.
The general list of documents to be provided depending on the type of claim. For personal accident insurance, your nominee will have to provide the following to the insurance company
- Notice of death within 30 days of the death of the cardholder. The letter should include a brief description of the circumstances of death.
- The death insurance claim must be filed within two months of the accident, along with the following documents:
FIR (First Information Report)
Examining the medical officer's report
If any of the documents mentioned above are in a vernacular language, it should be translated into English and notarised by a notary.
Note that your credit card's insurance company may request other additional documents if required. The settlement amount is paid to the beneficiary in the form of a cheque, after deducting any outstanding payments on the card.
No need to pay any additional premium
Unlike traditional insurance plans that require you to pay regular premiums, the insurance that comes with your credit card can be availed at no extra cost. However, that doesn't mean it's completely free. Your credit card issuing company recovers the value of the policy, from the joining fee or annual fee charged. Different card issuers partner with various insurance companies to offer these benefits to their cardholders.
Top Credit Cards that offer Life Insurance Coverage (i.e., Personal Accident Death Cover)
|Credit Card Name
|Accidental Death Sum Assured
|ICICI Bank Diamant Credit Card
|Rs. 3 crores (For air accidents)
|HDFC Bank Credit Card
|5 times of the available credit card limit (up to a maximum of Rs. 50 lakhs)
|Axis Bank Privilege Credit Card
|Rs. 2.5 crores
|Citi Prestige Credit Card
|Rs. 5 crores
|Canara Bank Credit Cards (Visa and MasterCard)
|Rs. 2 lakhs to Rs. 4 lakhs
|Etihad Guest Premier Card from SBI
|Rs. 50 lakhs
|Canara Bank Credit Card (Global Gold)
|Rs. 4 lakhs to Rs. 8 lakhs
|Vistara Signature Axis Bank Credit Card
|Rs. 2.5 crores
|MoneyBack Credit Card from HDFC Bank
|Rs. 50 lakhs
|ICICI Bank Rubyx Credit Card
|Rs. 3 crores (For air accidents)
The Final Word
Depending on the type of credit card you own, you may be eligible for certain insurance benefits. However, remember that these are additional benefits, and you should not rely solely on your credit card for all your life insurance needs. It's highly recommended that you pay for life insurance like term insurance separately, as most credit cards only offer personal accident insurance coverage.
FAQ of Do credit cards come with life insurance?
1:Is there insurance for credit cards?
Credit card insurance or balance protection insurance aids in paying your outstanding balance (subject to any limits in the policy) or makes monthly payments on your behalf to your credit card issuer in case your income is disturbed due to unforeseen circumstances.
2:What are the benefits of credit cards?
The benefits of credit cards are multiple, and some of the top ones are:
- Buy on credit
- Most accepted method of payment
- Insurance coverage
- Interest-free cash withdrawals
- Making travel easy
- Unlimited reward points
- Improve your credit score.
- Discounts and cashback
3:Do you have life insurance on your debit card?
As per the insurance rules, debit or credit card users are provided with free accidental death cover. This can be claimed within 90 days in case of the account holder’s death. Also, according to rules, his free accidental life cover will be given on just one credit or debit card.