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Credit card repayment insurance is an optional policy that you can activate to cover the monthly repayment of your card in the event that you’re unable to pay.
Credit Card Repayment Protection Insurance is a type of insurance that takes care of credit card repayments when you can’t make them as a result of circumstances beyond your control. Such circumstances include losing your job involuntarily or becoming unfit for work through illness or injury. Your credit card debt will also be covered in the event of your death, giving your family one less financial worry. This means that a credit card with repayment protection insurance can provide real of peace of mind.
Some business credit cards have complimentary repayment protection insurance as part of their travel insurance cover, while some personal credit cards offer it in return for a small monthly premium cost, usually a percentage of the closing balance of your credit card statement.
The credit cards listed on this page all offer repayment protection insurance, either as a complimentary benefit or as an optional extra you can pay for. It’s very important to read the terms and conditions of the policy before you decide whether the cover offered is suitable for your circumstances.
The insurer will pay each month a portion of the credit card debt you had at the time you first became unable to work or lost your job. The amount covered will be only a portion of the total debt, e.g. a monthly payment of 6% of the balance owing at the time you stopped work, plus any interest charged, payable until you return to work. The amount paid is certainly likely to be a sum in excess of the minimum monthly repayment required by the card provider.
There may be a cap on the total amount claimable (e.g. $50,000), or on the length of time for which repayments are covered.
Some prestige cards, particularly American Express business cards, offer repayment protection insurance (in the event of an injury or illness sustained while travelling) as a complimentary benefit, so there is no specific charge to pay, only the card’s annual fee.
Where a card offers more comprehensive repayment protection insurance as an option to be paid for, premium rates and policy conditions vary depending on the insurer. The exact costs and conditions are covered in the product disclosure statement.
The premium will usually be calculated as a percentage of the credit card statement closing balance each month. This may be expressed as 'x cents per $x’. For example, if the premium cost was stated to be ’60 cents per $100’, the monthly premium for a closing balance of $1,937 would be $11.62. The monthly premium thus calculated will be automatically charged to your credit card.
No. Only individuals holding eligible cards have the option of repayment protection insurance. Where there is a payment involved, there is no obligation to purchase the repayment protection insurance offered.
Complimentary repayment protection insurance is limited to only a very few prestige cards. If the cover is complimentary, you will not need to do anything specific to activate it. It is simply there if you need it.
Consider the benefits of repayment protection insurance if you regularly have a large credit card debt (even if it is only the current month’s purchases) that you or your family would struggle to repay if:
You will be eligible if you:
If your claim is successful the monthly repayment amounts will be made directly to your credit card provider, not to you.
Yes. Even though you may be receiving one of these other payments as a result of illness, injury or unemployment, you should still be able to claim against your repayment protection cover.
Yes. You are unlikely to be covered if: