Insurance For Cards: How Card Protection Plans Work?
There were 57.4 million credit card users and 829.4 million debit card users in India as of April 2020. Be it small or lumpsum purchases, credit and debit cards are definitely gaining popularity over cash as a mode of transaction. The reason for the same can be accredited to greater convenience and quick access.
However, the same often prove quite challenging, especially when card users lose or misplace their plastic money. Such a situation not only interrupt financial activities but can also lead to massive monetary losses. A card protection plan can prove useful during such mishaps, as these insurance plans can help compensate the losses that occur due to card frauds.
How do card protection plans work?
Mentioned below are a few essential things to know about a card protection policy and how it works-
- What are card protection plans?
It is an insurance policy for those cards that are usually kept in a wallet. Such policies extend beyond credit cards and include debit cards, retail store membership and loyalty cards, and much more.
One of the best examples of such an insurance policy is Wallet Care cover offered by Bajaj Finserv under Pocket Insurance & Subscriptions. Policyholders can block all their lost payment cards covered under the policy plan with just one phone call instantly.
- How to avail this plan?
Usually, individuals can fill up a signup form available at popular insurance aggregators. These forms require the applicants to provide the necessary contact information and details about the cards they want to insure.
Upon paying the yearly premium, the issuer will send a welcome kit containing a sanction letter, T&C, benefits pamphlet, and payment receipts, among others. For some lenders, the welcome kit includes the registration form for cards to be insured under a wallet protection plan.
Applicants will have to fill up the said form and resend it to the credit card protection insurance provider, who will then activate the plan.
- Additional benefits
Besides extending coverage against the liabilities arising due to losing or misplacing payment cards, some card protection plan extends additional benefits. For instance, policyholders may avail financial coverage against unauthorised transactions due to theft or misplacement of credit or debit cards.
However, if card users wish to access extensive financial coverage against payment card frauds and online scams, they may consider availing fraudulent charges cover. To make the most of such insurance plans or to avail immediate assistance, card users should pick a policy that comes with a simple claim process.
Alternatively, they may get an ATM safeguard insurance policy to account for ATM frauds like skimming, keypad jamming, etc.
- Nominal premium, substantial cover
A non-comprehensive insurance policy usually focuses on one specific need of potential policy owners, like disease cover, travel-specific plans, and appliance protection policy. This is why most specific coverage plans, including card protection policy, often come with a low premium.
However, depending on the policy one opts for, he/she may avail compensation as high as Rs.2 lakh, which proves effective in meeting covered financial obligations quickly.
- Travel assistance
If card protection policyholders, lose their wallet or payment cards while on a trip to a different city or country, they can reach out to their insurance policy aggregator and avail emergency travel assistance. Usually, such a policy’s benefits include flight tickets, hotel stays, and emergency cash advances, among others.Small insurance policies like a card protection plan often fail to serve as a complete alternative to term insurance policies. Hence, policyholders should carefully read all policy-related documents and select a plan that best suits the specific requirements.