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Have a credit card? Get free insurance

Amar Pandit | November 17, 2008 11:24 IST

Once you own a credit card, there are some insurance benefits available to you as well. Surprised? You should be. If you carefully go through the services guide, which comes along with the newly-issued credit card, you will find an insurance company that is offering various kinds of covers. The best part is that the insurance company pays for these covers by purchasing group insurance schemes.

These insurance covers are supposed to ensure that there some kind of cover is available to you as well as the bank in case of an accidental death. There are some other freebies as well, in terms of insurance. But they come with a lot of disclaimers. Very few people are aware of these specific credit card insurance benefits. Here, we tell you about some of these covers and how nominees can approach respective banks for claiming them.

Some of the key insurance benefits include the following. However, remember that these limits differ from company to company.

Credit insurance: This insurance privilege provides a waiver of payment of the outstanding on your credit card account up to Rs 50,000, in case of an accidental death. Credit insurance is payable, subject to settlement of personal accident claim, in case of active cards. In case of inactive cards, claimants need to provide a death certificate.

Personal accident insurance: In case of any accidental death, there is a cover from Rs 2,00,000 to Rs 40 lakh (Rs 4 million) that is provided by different credit card companies depending upon the type of cards. For road accidents, the insurance cover is in the range of Rs 2,00,000-4,00,000, whereas for an air accident death, the cover could be anywhere between Rs 10 lakh (Rs 1 million) and Rs 40 lakh (Rs 4 million).

Lost baggage insurance: You are covered for loss of checked baggage (in excess of 48 hours of arrival at your destination) in the event of theft or total loss of baggage during domestic and international flights for up to $1,200.

Purchase protection: Your credit card offers you free purchase protection, under which all items bought using the credit card are insured against damage or loss due to fire or theft up to a value of Rs 50,000 for a 180 day period from the date of purchase.

Zero lost credit card liability: Credit card-holders have zero lost credit card liability after the loss of the credit card has been reported to the bank in writing or to the VISA/ MasterCard Global Emergency Assistance help lines. However, you will be liable for all charges incurred on your credit card before you report the loss of the card.

Besides the above, there are several other covers, such as hijack, loss of passport and others.

The caveat here is that most of these benefits are only for primary active card-holders. A primary active credit card-holder for the purpose of an insurance cover claim is someone who has used the credit card at least five times for the purpose of customer initiated purchase and/ or cash advance transactions within 89 days prior to the day of the occurrence of the event. You need to read the fine print very carefully because it will be different for different cards and limits.

The settlement process: For accidental death, the name of the insurance company can be found in the services guide that comes with the new credit card. The procedures and contact details are given in that book. In case you have lost it or cannot recollect where you have kept it, you need to call up the credit card help desk for this information.

The documents have to be provided to the credit card's insurance company include:

1. A notice of death should be provided within 30 days of the credit card-holder's death. This notice should include a brief description of the accident.

2. The claim must be filed within two months of the loss of life due to an accident and the following notarised documents should be submitted along with the claim form:

  • Death certificate
  • Police report/ panchnama
  • FIR
  • Post-mortem report
  • Examining medical officer's report
  • 3. In case any of the documents are in vernacular language, they should be translated into English and notarised. The insurance company might request for additional documentation. The settlement amount will be paid by an account-payee cheque in favour of the nominee after deduction of any amount outstanding due on the card account

    Depending upon the card you own, credit card insurance can satisfy some part of your life insurance needs. However, you should not entirely depend on this because it only covers accidental death. Also, the rules are rather stringent.

    The writer is director, My Financial Advisor.


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