There’s insurance for credit card debt, personal loans, mortgage loans and other kinds of loans usually offered through direct mailers and sometimes by telemarketers. It’s a complex product with a simple goal: to protect the borrower and the lender from loan default in case something happens to him while paying the loan.
But here’s a voice of reason from a bank that offers this product. “Not everyone needs it.”
Is it worth it to get credit card-related insurance? This is a question only the borrower will be in the best position to answer. Ask yourself: Is it worth it to get someone to help me pay off my credit card dues in the future when I can’t? Those who charge only a little amount on their credit card monthly, or regularly pay off the total credit card balance at month’s end don’t need it. (Read the rest of the article here.)
Protection for rainy days. Do you really need it? Photo from AFP.
Hmm. Thank you for pointing that out. Payment protection insurance is quite expensive and from personal experience, there’s something very wrong with the way it’s sold. The MoneySmart’s way is to just pay your credit card bill in full every time so that you don’t need to pay extra for payment protection. If that’s not possible, Citibank says it’s important to read the fine print on what is actually covered.
That’s an advice worth taking, whether or not you are in a hurry or just too lazy to read that fine print in gray font. We all feel like skipping that part, admit it! 
In taking out a home loan, for example, payment protection insurance adds quite a sizable amount of money to the loan, but not all real estate companies are transparent about it.
Before you take out that loan and sign up for payment protection insurance, ask:
- whether payment protection insurance is compulsory,
- whether it will really cover you at your present age,
- whether there are policy exclusions,
- whether you can find a cheaper payment protection insurance somewhere else,
- whether you have payment options (i.e. upfront payment or monthly basis).
A lot of questions, I know, and I hope the agent is patient enough to answer your questions. Still, it’s always better to be informed than sorry.
September 19th, 2007 at 9:52 pm
salve, my understanding that banks go after the estate of the person who died is only limited to that. if his total assets under his name is less than his debts, the debt balance is not passed on to the family. but banks can freeze all his assets when death is publicly announced. all his creditors can file claim on his estate. the heirs will be the last to claim whatever is left.
September 19th, 2007 at 6:36 pm
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September 19th, 2007 at 5:18 pm
tutubi, i definitely agree. don’t carry a big balance na lang.
September 19th, 2007 at 5:14 pm
hi hachiko, thats the thing. its usually sold as part of the entire deal, especially for home loans. there”s no transparency.
September 19th, 2007 at 5:14 pm
jigs, most of us are lax even without the payment protection insurance.