The Ultimate Guide to Credit Card Payment Insurance Protection in Canada

The Ultimate Guide to Credit Card Payment Insurance Protection in Canada

    If you’ve made it onto this page, you’ve likely been approached by a bank employee about buying credit card payment insurance, or read about it somewhere. 

    But do you really need it? In this ultimate guide, we will explore everything you need to know about credit card payment insurance protection. From understanding what it is and how it works to the different ones available on the Canadian market, we’ve got you covered. 

    So, let’s dive right in!

    Understanding Credit Card Payment Insurance Protection

    Credit card payment insurance protection is an insurance policy designed to relieve you of financial obligations associated with your credit card payments in case you are unable to make them due to events such as illness, disability, unemployment, or death. It provides some sort of a safety net, helping ease the burden of credit card debt during challenging times.

    When you sign up for credit card payment insurance protection, you pay a monthly premium to the insurance provider. This premium is based on factors such as your credit history, current financial situation, the coverage you desire and your credit card balance.

    In case you are unable to make your credit card payments due to unexpected (and covered) events, the insurance provider will step in and pay off a portion of your payments for a specified period.

    Different Types of Credit Card Payment Insurance Protection in Canada

    Now that we understand what credit card payment insurance protection is, let’s explore the different types available in Canada. Each type of insurance offers unique benefits tailored to your specific needs.

    Life Insurance

    Life insurance coverage offers financial protection to your loved ones in case of your untimely death. It ensures that your outstanding credit card payments are taken care of, relieving your family from the burden of debt in such difficult times.

    Imagine a scenario where you are the primary breadwinner of your family, and tragedy strikes. Your sudden demise not only leaves your loved ones devastated emotionally but also puts them in a precarious financial situation. However, with life insurance, your family can have the reassurance that your remaining financial obligations, specifically credit card payments, will be covered. This allows them to focus on healing and rebuilding their lives without the added stress of debt.

    Disability Insurance

    Disability insurance provides coverage in case you become disabled and are unable to work. It helps cover your credit card payments, providing financial stability during a challenging period of adjustment and recovery.

    Accidents and illnesses can happen unexpectedly, leaving you unable to work and earn a steady income. During such times, disability insurance acts as a safety net, ensuring that your credit card payments are taken care of. This allows you to focus on your recovery and rehabilitation without worrying about the financial implications of your disability.

    Critical Illness Insurance

    Critical illness insurance protection is a financial safeguard that covers credit card payments if the insured suffers a severe medical condition specified in the policy, such as cancer, stroke or dementia. It helps ease the financial burden during illness, ensuring card payments are met, allowing focus on recovery without credit card debt concerns.

    Involuntary Unemployment Insurance

    Involuntary unemployment insurance, also known as wage-loss insurance, offers protection for those unexpected moments when you lose your job through no fault of your own. It covers all or some of your credit card payments until you find new employment, offering a safety net during a stressful transition.

    Job security is never guaranteed, and sudden unemployment can be a significant setback. Involuntary unemployment insurance provides you with the peace of mind that your credit card payments will be covered while you search for a new job. 

    Your Credit Card Payment Insurance Protection Options in Canada

    Most credit card payment insurance options in Canada offer a combination of the different types of insurance outlined above. Here are your options at the big banks in the country.

    Credit Card Payment Insurance ProductCoveragePricing
    CIBC Payment Protector Insurance for Credit CardsUp to $50,000 paid towards your credit card balance Involuntary Unemployment, Loss of Self-employment and Disability: 20% of the balance on your last credit card statement prior to job lossLife, Accidental Death and Critical Illness: entire balance on your last credit card statement prior to date of diagnosis or deathPrimary Cardholder only: $0.99 per $100 owed per month
    Primary Cardholder + Spouse: $1.19 per $100 owed per month 
    RBC BalanceProtector MaxUp to $25,000 paid towards your credit card balance Job loss and “total” disability: 25% of your total account balance (max. $6,250 each month for four months)$1.20 per $100 owed per month 
    Scotia Credit Card Protection insuranceUp to $50,000 paid towards your credit card balance Basic coverage: life, critical illness and hospitalization Comprehensive coverage: all of the above plus disability, job loss and strike Basic coverage: $0.89 per $100 owed per month 
    Comprehensive Coverage: $1.09 per $100 owed per month 
    BMO Credit Card Balance Protection EnhancedUp to $20,000 paid towards your credit card balance “Total” disability and job loss: 20% of your balanceLife: lump sum $20,000 towards your balance$1.00 per $100 owed per month 
    TD Credit Card Payment Protection PlanUp to $25,000 paid towards your credit card balance “Total” disability and job loss: monthly payments towards 20% of your balanceLife: lump sum $25,000 towards your balance$1.20 per $100 owed per month  
    National Bank Mastercard credit card payment insuranceUp to $50,000 paid towards your credit card balance Four different packages: Regular, Distinction, Autonomy and 65+  $0.69 to $1.20 per $100 owed per month 

    How to Choose the Right Credit Card Payment Insurance Protection

    Choosing the right credit card payment insurance protection can be a critical decision. Here are some factors to consider when selecting the right insurance coverage for your needs.

    Assessing Your Needs

    Start by assessing your current financial situation and needs. Consider factors such as your monthly credit card payments, outstanding balance, and potential risks or uncertainties in your life. This evaluation will help you determine the type and level of coverage you require.

    Comparing Different Insurance Providers

    Once you have a clear understanding of your needs, it’s time to compare different insurance providers. Look for reputable providers that offer comprehensive coverage at competitive rates. Take the time to read reviews and consider their customer service reputation. 

    By doing so, you might find that bank employees might have the tendency to try to upsell on expensive credit card insurance, or that some of these plans have the reputation of seldom paying out. 

    Do also consider the fact that you might not need credit card payment insurance. This may especially be the case if you already have life, disability or critical illness coverage. You may also consider speaking with your current insurance provider to increase your coverage amount, which may be cheaper than buying this protection from banks. 

    Understanding the Terms and Conditions

    Before making any final decisions, carefully review the terms and conditions of the insurance policy. Pay attention to details such as coverage limits, exclusions, waiting periods, and any additional benefits or services provided. This will ensure that you have a thorough understanding of what is covered and avoid any surprises in the future.

    By following these steps, you can choose the right credit card payment insurance protection that meets your unique needs and provides you with the peace of mind you deserve.

    Credit Card Payment Insurance Protection in Canada: The Bottom Line

    Credit card payment insurance protection is a safeguard that can help to protect your financial well-being during unexpected events. By understanding what it is, how it works, and the different types available, you can make informed decisions and select the right coverage for your needs.

    Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications