Credit Insurance Worth it?

[Open123]

+1 

No.  In general, Insurance is never worth it.

[onstar]

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@Open123 wrote:

+1 

No.  In general, Insurance is never worth it.

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This is true. Insurance is offered so that the insurance company can make money. This is true for ALL insurance, whether it is auto, home, life, credit, travel, malpractice, disability, etc. So the question of "worth it?" as in "does it give me a positive expected value?" would always be a NO.

So the real questions should be, "Does the peace of mind that the insurance provides me worth the premium to me?" or "Given the probability of risk being so low, am I willing to forego any protection?"

Back to credit insurance by PenFed. This is a life insurance with a variable face value that equals the statement balance. Since they don't do a medical and they give a flat rate to everybody, they charge a higher fee for that.

The "as low as" is explained here:

https://www.penfed.org/Credit-Insurance/

Basically the fee goes up if you have a joint account or if you add disability coverage.

[ojefferyo]

I did not

[pip3man]

I may have to go contrary to everyone's view regarding this but here's my opinion. I personally think it's worth every penny. Why? because I benefitted from it on my now closed BOA 123 Cash Rewards card. I had the Credit Protection Plus on my account, I was in college and unemployed. My balances was never paid, got late, eventually charged off and sent to collections. I totally forgot about that benefit until few years later. Guess what, the insurance paid off the entire balance I owed (like $2k or thereabout) and wait there's more... they reversed the charge off and deleted all the multiple lates reported with the credit bureaus. Moreso they even refunded the full premium I had paid for the life of the card. It's very useful if u ever experience a qualifying life event. And I think I even posted about this in the Rebuilding section when I was in the process of rehabilitating my credit.

[Walt_K]

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@Anonymous wrote:

Then I guess no one has ever been laid off for some time . ?

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No, it's not that no one has faced being laid off or is concerned about it, the issue is that these policies are too expensive, have lots of exclusions, and can be difficult to get them to pay out.  For death and disability, you are much better off with a traditional life insurance or disability policy, which will be cheaper and will pay more than just your credit card bills.  For unemployment, you should have an emergency fund, but many of us don't.  Even so, typically, for unemployment, they are just going to pay your minimum payment, not the whole balance.  And you typically have to be completely unemployed or they will deny the claim.  This is expensive coverage and presents a lot of hassles and headaches to jump through the hoops required to get them to make your minimum payment.  

[SpiceIslander]

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@Walt_K wrote:

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@Anonymous wrote:

Then I guess no one has ever been laid off for some time . ?

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No, it's not that no one has faced being laid off or is concerned about it, the issue is that these policies are too expensive, have lots of exclusions, and can be difficult to get them to pay out.  

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Totally agree! I had payment protection for 2 of my cards several years ago. I became unemployed for 6 months and when I looked into the benefits, there were so many exclusions, I just decided to forget it and paid the cards out of my savings. In many cases, you have to stop using the card as well which I can understand but when you're down and out, it's difficult not to be able to use your cards. I've since cancelled the protection and have none now. If it weren't so expensive, it might be worth it.

[Imperfectfuture]

Semi retired and self employed? They haven't even offered this protection on my cards. But, I have the wherewithal to make at least double minimum payments if push comes to shove.

[joedtx]

There has been some good pro's and con's on this thread. I'd have to say it really depends on the product, so a little bit of research on the product that the issuer is offering will determine whether in fact it is a quality product that really will benefit you, lets face it not all products are equal. I'd have to think that at least looking at the Credit Unions they are going to be more likely to offer a product that benefit its membership whereas the larger commerical banks not so much.

[Callandra]

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@onstar wrote:

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@Open123 wrote:

+1 

No.  In general, Insurance is never worth it.

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This is true. Insurance is offered so that the insurance company can make money. This is true for ALL insurance, whether it is auto, home, life, credit, travel, malpractice, disability, etc. So the question of "worth it?" as in "does it give me a positive expected value?" would always be a NO.

So the real questions should be, "Does the peace of mind that the insurance provides me worth the premium to me?" or "Given the probability of risk being so low, am I willing to forego any protection?"

Back to credit insurance by PenFed. This is a life insurance with a variable face value that equals the statement balance. Since they don't do a medical and they give a flat rate to everybody, they charge a higher fee for that.

The "as low as" is explained here:

https://www.penfed.org/Credit-Insurance/

Basically the fee goes up if you have a joint account or if you add disability coverage.

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Insurance is always overpriced and insurance companies try to count on you not using it. Of course nowadays, insurance tends to be required -- the government has required health insurance (but for many, the penalty may be just be more cost-effective than the monthly premiums), car insurance (depending on your state, not sure about my state but when I bought the car, there was a clause saying the car -must- be insured at all times in the purchase agreement), renter's insurance (the complex I live in requires it), etc. 

I was offered something like that through Comenity when I got my Victoria's Secret card; took me 5 minutes of repeatedly telling the rep no. I have more than six months worth of income in my savings so I would just use that to pay off my all cards/expenses if I was out of job. 

[cashnocredit]

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@onstar wrote:

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@Open123 wrote:

+1 

No.  In general, Insurance is never worth it.

---

This is true. Insurance is offered so that the insurance company can make money. This is true for ALL insurance, whether it is auto, home, life, credit, travel, malpractice, disability, etc. So the question of "worth it?" as in "does it give me a positive expected value?" would always be a NO.

So the real questions should be, "Does the peace of mind that the insurance provides me worth the premium to me?" or "Given the probability of risk being so low, am I willing to forego any protection?"

Back to credit insurance by PenFed. This is a life insurance with a variable face value that equals the statement balance. Since they don't do a medical and they give a flat rate to everybody, they charge a higher fee for that.

The "as low as" is explained here:

https://www.penfed.org/Credit-Insurance/

Basically the fee goes up if you have a joint account or if you add disability coverage.

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Nice.  I don't run across that many folks that understand insurance is a negative expectation deal. One gets insurance for events that would cause a severe financial strain should the event happen. Generally, as you build up savings in life you can cut back on what you choose to insure and pocket the vig. For instance more savings allows you to increase auto deductables. OTOH it often makes sense to increase the liability cap to reduce other asset risk. Usually the latter is pretty cheap compared to the former.

I don't insure what I can afford unless required by law.