With credit cards, it can often seem like benefits and rewards are ploys to get you to enroll in debt and steep interest. Credit cards make money through interest paid on your debts. So, yes, their goal is to put you in debt. Still, there are benefits in credit cards that make their usage a good choice. If you make yourself aware of the advantages and use them wisely you will be able to benefit from them without putting yourself at the mercy of the credit card company.
Rewards for travel, groceries, dining out, and gas are well known features popular with many cards today. The added insurance features that are available on some cards are much less known and could provide an even greater benefit if you were to find yourself in a difficult situation. Check your credit card for the list of insurance features that are offered.
Cellular Phone Replacement
Most of these insurance coverages only apply if you pay for the item with your credit card. In this case, you’ll need to be paying your cell phone’s monthly bill in order to be covered under this insurance. If you are covered, you will be reimbursed for a purchase of a new phone if your phone gets damaged or stolen.
Watch out for exclusions on this policy. Also, make sure you are aware of how much you will be reimbursed for your new phone. There will probably be a limit. Don’t expect the credit card company to shell out the full price of a brand new iPhone for you.
This might be the most useful and practical form of insurance offered by credit cards. If you have never lost luggage yourself while travelling, chances are strong there aren’t many degrees of separation between you and somebody who has. Having insurance in place to cover lost items in the event of this happening is a big value.
There may be some items that are not included with this insurance and there will definitely be a coverage limit. If you are traveling with property that is especially valuable to you, it is best that you find a policy of traveler’s insurance that will meet your needs.
Travel Accident Insurance
This insurance is usually only a feature that activates in the event of an accident while in transit (on plane, bus, train, etc.). While restricted in its scope, it still has value. It provides a valuable benefit to yourself or members of your family in the event of your death or dismemberment.
The main thing to remember with this protection is that it is not a suitable replacement for travelers insurance. Do not expect this insurance to pay for instances of sickness or hospitalization during your trip. If you are going to a place where risks are high, traditional travelers insurance will be important for you to look into.
Travel Cancellation Insurance
This is a type of insurance not widely offered in credit cards. It is a feature you will have to look out for. If you spend a lot of time traveling, it would be worth your time to find a credit card that does offer this. When you have to cancel a trip due to sickness or unforeseen circumstances, most airlines will not refund your tickets.
There are particular instances that are excluded from being covered under this insurance. Read the terms of the agreement clearly. Do not expect this insurance to pay for things like over-night stays in a hotel in the event of a weather delay.
Car Rental Collision Insurance
Many credit cards offer collision insurance for rental cars you pay for with your credit card. Do not be fooled into thinking this means that liability coverage is included in this package. Most likely, you will have to rely on your own insurance for that. Still, the benefit of having damages paid for is a big one.
In most cases, you will first need to have the damages paid for and then will be reimbursed by the credit card company. This may be sufficient for you to pass on the rental insurance offered by the rental company but there could be added charges that your credit card’s insurance will not cover.
Exclusions and Fine Print
In all of these cases, you will want to make sure you read the terms of the agreement clearly. Especially if you have travel or something coming up in the future where you know a situation might call for claim, you need to understand what is covered and what is excluded. Just because the credit card companies offer these forms of insurance does not mean they want to pay them. You can be sure there is plenty of wording involved that gives them a way out. Read carefully to understand whether you need other insurance.