Do you have credit card insurance? Is there really huh? What is the use of credit card insurance? This time independent financial planner Jane Lua will discuss credit card insurance.
Credit Card Insurance
You who have a credit card must have experienced on the phone with this protection offer. On the market, the name is famous for Credit Guard , Credit Shield , Credit Protection and so on.
Based on the results of discussions with several clients, it appears that some people already have credit card insurance. Unfortunately they don’t have other life insurance or health. Surprisingly almost all do not remember the percentage of premiums paid, let alone the requirements of the policy provisions.
Some clients say that they get telephone offers from telemarketers . The process is also relatively easy, as easy as saying “yes” and verification of data, next month it can appear on credit card bills.
Most assume, credit card insurance is necessary because they do not want to burden the family with credit card bills if there is a risk to them. Hmm … the progress of awareness is quite good even though it is not necessarily all effective and correct. Let’s discuss it.
How much is the premium amount?
Usually the range is between 0.5-0.9% of bills per month.
For example, let’s take an average of 0.7%. The average bill per month is 10 million rupiah. Means the premium to be paid is 0.7% x Rp 10 million = Rp 70,000. Apparently credit card insurance, the premium is quite affordable huh? It must be remembered, the larger the bill means the greater the premium that must be paid for the month.
Does credit card insurance have a legal basis?
Yes, we can see through the link below the Minister of Finance Regulation Number 124 / PMK.010 / 2008 concerning the Implementation of the Credit Insurance Business Line and Suretyship Article 1 paragraph 2:
Credit Insurance is a general insurance business line that guarantees the fulfillment of the financial obligations of the credit recipient if the recipient of the credit is unable to fulfill its obligations in accordance with the credit agreement.
Debt after Someone Died
If someone who has a debt (debtor) dies, according to inheritance law, the heir must also inherit that person’s debt! Especially credit card debt with exorbitant interest rates. So this is enough to support whether or not credit card insurance is necessary.
If the assets or inheritance left behind are bigger, there is no problem, the problem and troublesome thing is if the person turns out to be more in debt (although there are ways that can be used for this, Jane Lua’s team can discuss it in another article).
Do you need credit card insurance? The answer depends on the amount of debt and your financial condition. If the average person’s bills are not too large, (hundreds of thousands to several million rupiah), they already have life insurance (with enough insurance to pay debts) or have liquid assets or savings that are far greater than the value of credit card debt, actually not need credit card insurance.
If the budget for buying separate insurance does not yet exist and the use of credit cards is not routine, it can be a good consideration (only temporary, yes!).
5 Important things to consider are:
- Usually the card center and credit card collections are different parts, so the process of claiming is not as easy as giving additional credit card insurance over the phone.
- Be sure to know the policy / exclusion provisions. So understand the policies and regulations correctly.
- Can the average bill for this credit card insurance premium be replaced with term life insurance that can be purchased separately with premiums comparable / cheaper too?
- Learn technical how to claim .
- Make sure there are family members who know if you are interested in taking credit card insurance. This is necessary so that the family knows what to do if there is a risk.
Is it really cheap credit card insurance premiums?
Let’s try to make a comparison of the amount of premium paid. Amir, 30 years old, has an average credit card bill for his business interests reaching 100 million rupiah per month. It means that Amir must pay a credit card insurance premium of Rp 100 million x 0.7% = Rp 700 thousand. Here the premium paid is forfeited and the benefits received in the event of a risk (sum assured) are only IDR 100 million.
We try to compare with one of the pure term insurance products that are paid monthly, with a fixed contribution for a certain period (say 15 years) with a final benefit of maturity (the end of the premium payment) in the amount of the deposited. Without the results of investment development, because it is not a unit link .
The minimum sum insured that can be purchased is Rp. 100 million, with a premium of Rp. 200 thousand. There are several insurance companies that give returns on premiums that have been paid first, if there are no claims. In this case IDR 200 thousand x 15 years = IDR 36 million (without tax deductions).
It turns out there is a difference in the amount of premium paid Rp 700 thousand (credit card insurance) and Rp 200 thousand (insurance term life ) for the same money insured value.
So what are the benefits of credit card insurance?
Based on the comparison above, it turns out that credit card insurance is not cheap. Credit card insurance can be used in a short time. The author himself prefers to separate, because the process of claiming becomes easier and has been able to manage how much it will cost. Hopefully the discussion of credit card insurance is quite clear and useful .
So do you need credit card insurance?