Insurance can be an important part of your financial planning in many ways. Medical insurance can protect you and your family from massive debt in the case of illness. Disability insurance can provide income if you become unable to work and life insurance can provide funds for your spouse in the case of your death.

While most people are aware of these kinds of insurance and how they can help deal with unpleasant circumstances in their lives, many are not aware of another kind of insurance that can be an enormous help in times of financial hardship. This is credit card insurance.

Credit protection insurance is a type of insurance policy that will make the minimum monthly payment due on your credit card on your behalf when you cannot do it because you have become disabled or in the case of your death.

Two Kinds of Credit Insurance

Insurance on your credit card comes in two varieties. The first is credit disability insurance and the second is credit life insurance.

Credit Disability Insurance

This type of insurance can be purchased to protect you in the case that you become disabled and cannot work. While you cannot work, this insurance makes the minimum monthly payments on your credit card for you. This type of insurance can be put into place to cover your credit cards and most loans including your car loan and your mortgage loan.

Credit Life Insurance

This insurance protects your family against losing your financed assets in the event of your death. Credit life insurance pays off the balance of your loans (credit cards, mortgage, auto loan and other loans) completely if you die. This means that your family is not burdened with the debts on these things when you are gone.

How to Purchase Credit Insurance

There is more than one way to get these types of insurance protection. Firstly, you may be offered credit insurance individually by each credit card you have, each loan provider you have. You can also purchase this kind of insurance from one single place that covers all the loans and credit cards you have debt with.

Many financial institutions have partnered with insurance agencies to provide credit insurance to customers who use credit cards and have loans with them. Most insurance companies also offer credit insurance directly.

If you are offered this type of insurance for one credit card or one single loan product, you should consider comparing the price they quote you to the price from your insurance company as well in order to determine which may work best for you.

Making a Choice

Credit insurance protection may not be right for everyone. As is the case in any kind of insurance it is something that may or may not ever be used and it still costs money each month.

You must look at your whole financial situation when you determine whether this type of protection is for you. Some things you should look at when deciding are:

• The total amount of your debt. How will you make the monthly payments in the case of disability?
• What do you want to happen to your financed assets and your debts in the case of your unexpected death? Will your family be able to continue the payments?
• Do you and your family have enough savings to maintain your financial responsibilities in the case of disability without insurance?

If you choose not to carry any credit insurance you may want to protect yourself in another way. Many financial experts suggest that a savings account with enough to cover your monthly expenses for six months. It is also suggested that you consider taking out a term life or term disability insurance policy if you carry a high balance on your credit cards and loans.

Credit Card Offers

Sometimes you receive credit card offers in the mail or you are invited to apply for credit cards online with instant approval. You may decide that you want to use balance transfer credit card offers to manage your current debt. If you do have credit card insurance you will need to make sure that it covers your new cards. This is very important. Do not assume that coverage you have on one credit card gives you coverage on another card. Be very sure that any new loans and credit cards you take on are added to your insurance plan if you want them to be covered.

Credit Insurance Tips

• There is no physical examination required when you take out credit insurance
• Premiums for this insurance can be paid automatically with the monthly payment on your credit card or your loan
• Premiums are usually the same regardless of age or occupation

You may be able to participate in group insurance plans that reduce your costs