Whenever you apply for a credit card, you are usually asked in the form of a little bow, whether you want to take out payment protection insurance. Now generally we are told to tick the boxes on any forms that we fill in as it opt us out of any further correspondence from companies trying to sell you things. However, this box is different, but is it actually needed?

The Pros and Cons of Payment Protection Insurance

Payment Protection Insurance can be worthwhile in certain circumstances. For example, it usually covers you in case you cannot pay your balance off at any time for whatever reason. As you generally do not know what is going to happen in life, often it is a good idea to have some form of insurance that protects you against things such as unemployment, however is actual credit card payment protection insurance worth it?

Usually the answer is no. Whilst it is a great idea to have payment protection insurance, usually getting it from your credit card lender is a mistake. They charge over the top prices and it is likely that you can find it at a much cheaper price elsewhere. It is just more convenient to use your lender’s services than it is to choose something else.

Another reason why payment protection insurance may not be worth the hassle, is because often there are too many grey areas where the insurance won’t pay out. There are certain illnesses for example, which insurance companies will not pay for. It could be backache due to a job where you work all day sitting down in front of a computer, or it could be depression. There are a number of illnesses which many insurance companies simply will not cover and so it is important to know about these before you agree to anything.

If you become unemployed during your time on the payment protection insurance, there are also restrictions on that which are worth looking into. You will certainly have to have been made unemployed through no fault of your own and if not then they will not pay out anything and you will still be responsible for the repayments. Basically you have to show the insurance company that you have done everything you can to stay in employment and pay off your monthly repayments; otherwise they will not give you a dollar.

Overall it is handy to have payment protection insurance, though sometimes with all of the grey areas it is not really worth it. Make sure that you choose a plan where you know what you are getting and always ensure that you read through the terms and conditions before you agree to anything too. That way if you do decide to apply for the payment protection insurance, you will know exactly what it covers and whether it is worth it or not.