Credit card insurance has become the new “must-have” benefit with your little piece of plastic. Credit card lenders will tell you that thanks to the prevalence of identity theft and fraudulent charges on millions of credit cards each year, credit card insurance has now become the ultimate weapon in fighting back against theft and incorrect charges – and even against unemployment and disability!

Yet if you’re ready to add on insurance to your credit card, keep in mind that this insurance premium doesn’t come cheaply – in fact, many lenders will charge up to $30 a month (or $360 a year!) for a benefit that you might not need at all. If you’re sticking to a budget, or just want to look for ways to trim costs around the home, then you’ll need to weight out the pros and cons of credit card insurance before signing that contract. Here’s what you need to know about the benefits of credit card insurance:

Credit Card Insurance Can Help In A Pinch. While all of us like to think that we’ll be strong and healthy enough to pay our credit card bills each month, there are certain scenarios that might render us incapable of paying our bills – for example, unemployment or a sudden disability. If this should ever happen to you, your credit card insurance will pay off any balance or monthly bills that you may have, depending upon the terms of the policy. Make sure that you read all of the terms, as there could be quite a few clauses regarding this benefit.

Credit Card Insurance Can Help Your Loved Ones. Should you ever die and leave your loved ones with a hefty debt balance, credit card insurance can pay off that balance upon your death. It’s a great option to make sure that the savings of your loved ones don’t go towards paying off your debts, and provides peace of mind in what is always a difficult period for any family.

Your Credit Rating Will Be Protected. If you ever lose your job or become disabled, your credit rating will be protected by your credit card insurance, as this benefit will pay off monthly credit bills or any balances that you may carry on your card.

Be Prepared To Pay Up If You Have A High Limit. Most terms of credit card insurance is perfectly reasonable, if you have a card with a relatively low balance. Since credit card insurance premiums can’t be determined based upon your age, gender, race or other external factors, lenders will usually charge you anywhere from $0.75 to $1.00 per $100 of loan credit. However, if you carry a card with a credit limit of $10,000, your premium can be up to a hefty $100 a month – that’s $1,200 a year!

As you can see, credit card insurance is like a double-edged sword: it can really help out in a pinch, but in all likelihood, the average consumer might not even need its benefits at all. If you’re not shy about paying potentially hefty premiums to get this benefit, then credit card insurance sounds like the right fit. If you’re a bit more budget-conscious, however, you might want to explore other options before adding on the expensive premiums.

Either way, Credit Card Insurance should be given serious thought, especially in what is a very uncertain future.

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