A credit card payment protection plan can provide shelter from the storm
When a major event turns your life on its head and threatens your financial situation, it’s nice to get a financial boost from a credit card payment protection plan.
You’ve probably heard it said a thousand times: credit cards are meant to be short-term loans. Using them allows us to delay payment for products and services. To avoid being charged interest, you need to pay off your balance, ideally before the due date.
However, bad luck often hits out of nowhere and when you’re diagnosed with cancer, for example, making credit card payments suddenly becomes your last priority. But even if you have other things on your mind, you still need to pay your balance.
It’s in circumstances like these that a credit card payment protection plan can really help.
First of all, what is a payment protection plan or credit card insurance?
It’s a type of insurance that protects your credit card balance when a major event happens, like serious illness, disability, accidental dismemberment, involuntary job loss or even death.
Each credit card payment protection plan has its own specific features. Some even cover you for accidents that arise from practicing extreme sports, like skydiving, paragliding or bungee jumping.
Depending on the plan you take, your insurance can help you make payments in whole or in part, freeing up the funds you would have used to pay off your card for other things. This might seem trivial or represent only a small amount.
However, when you’re the victim of a major event (or accident) that forces you to stop working for a period of time, every penny makes a difference.
When cancer hits…
According to the most recent statistics, one in two Quebecers will be diagnosed with cancer at some point in their lives. While these numbers give us an idea of how common and widespread this disease is, the shock of a diagnosis is still brutal.
After the shock usually comes treatment, then a period of convalescence that often prevents people from working. Though some people are fortunate to have disability insurance through their jobs to see them through, not everyone is so lucky. If you’re in this situation, a credit card payment protection plan could make a noticeable difference.
Avoiding extra financial strain, in this case paying your balance, while you’re trying to build up strength and concentrate on your health, can take a major weight off your shoulders.
Losing your job
No one is ever really ready to lose their job. Sometimes you’ll get a sense that there’s instability in the workplace, but you never really know if you’re going to be affected. If you’re laid off, you might receive a severance package.
And employment insurance will also give you some financial support, provided you’re eligible. However, the amount you’ll earn represents 55% of your monthly insurable salary up to a maximum of $51,300 per year, according to the Government of Canada.
Would you be able to pay all your bills with half of your current salary?
For some people without a financial buffer, this amount can be a life-saver, but it isn’t necessarily enough. That’s why you might be relieved to know that your credit card payment protection plan will pay the minimum monthly balance on your account, and even a bit more.
In conclusion, a credit card payment protection plan is there to give you a financial boost and possibly help you avoid dipping into your emergency fund or seeing your situation get worse. Often taken in addition to other types of insurance, it can be a useful addition to a balanced insurance portfolio.
When it comes to insurance, you should be looking for coverage not only to maintain your lifestyle, but also to pay your debts and avoid, at all costs, damaging your credit.
Edited on 2 January 2018