Credit Card Protection Insurance: Is It Worth It?

Sometimes, but often it is not worth it for most people.

Credit card protection insurance can help cover your credit card balance if you face things like job loss, disability, critical illness, or death.

It can be pricey for what you get, and coverage usually comes with limits and exclusions.

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What Credit Card Protection Insurance Is

This insurance (also called credit card balance insurance or balance protection insurance) is an optional add-on that may help pay down or pay off your credit card balance if certain life events happen.

Many plans pay only a portion of your balance each month for a limited time (for example, 10%–20% per month for 5–10 months), and some may pay up to a maximum amount for severe events.

When It Might Be Worth It

It can be worth considering if you:

• Carry a large balance you cannot pay off soon

• Have little or no emergency savings

• Do not have other coverage (like life or disability insurance) and you are worried about a worst case scenario

• Want the peace of mind, and you fully understand the limits

When It’s Usually Not Worth It

It is often not worth it if:

• You could build a small emergency fund instead (even a little buffer helps)

• You already have coverage through work or another insurance plan

• The plan only pays a small portion monthly, but the premium is high

• The policy has exclusions that make it hard for you to qualify for benefits

What to Check Before You Buy

These plans often charge a monthly premium based on your balance, like about $0.83 to $1.20 per $100 owed (examples vary by provider).

Before saying yes, look for:

• Cost per $100 of balance

• What events are covered (job loss, disability, illness, etc.)

• How benefits are paid (partial monthly payments vs paying off the full balance)

• Maximum payouts and time limits

• Waiting periods and exclusions

• Cancellation rules (some providers offer a short “review period” to cancel)