Credit Card Insurance BasicsA credit insurance plan is meant to cover the balance or the minimum payments on a particular line of credit that it is purchased for.
Plans differ, but a plan may, for example, cover the whole balance if the
credit holder passes away. If he or she gets laid off or becomes disabled, it may cover the minimum payments so the loan does not go into default.
If you have just signed up for a new loan, credit card, or retail line of credit, you may have gotten a very attractive offer to purchase coverage like this. At first, it may seem like a good deal because your balance will be covered for a few cents on the dollar. But you must understand that this product makes credit companies a lot of money, and it is something they rarely pay out on.