Credit cards are not just for spending money, but can also, when used correctly, help generate substantial savings through reward points. However, that's actually only a small part of the benefits on offer. Nowadays a majority of credit cards even zero annual fee cards actually come loaded with various lesser known features that can help you save your hard-earned money. Among the lesser known benefits of a credit card, these complimentary insurance benefits are perhaps the least availed. In the following sections, we will discuss how you can generate savings by taking advantage of these free to avail insurance benefits.
Also Read: HOW TO USE YOUR CREDIT CARD SMARTLY?
Cellphone Replacement Coverage
We live in an age where each new cellphone tends to be more expensive than its predecessor. Thus getting your cell phone damaged or stolen can significantly impact your budget. Now a few credit cards offer a cellphone replacement coverage feature, which kicks in when you pay your monthly mobile bill using an eligible card. Through this complimentary coverage, you can get the device protected from theft or damage for each month you use your card to pay the mobile bill. There are definitely a few limitations to the coverage such as a deductible amount, a maximum cap on the coverage, a limited number of claims in a year and no coverage in case of a device that's lost. Even with these limitations, your savings would be substantial in case you have to buy a new phone due to theft or damage of the existing one.
Travelling helps one relax and though no one wants to run into problems while vacationing, sometimes the unexpected does happen. The complimentary hotel insurance benefit offered by a few card providers can definitely help out in case your property gets stolen from your hotel room. This coverage is applicable as long as the room was paid for in full with an eligible credit card. Some card providers offer this benefit only at domestic hotels, while others may allow this benefit even at international locations.
Airline baggage tracking technology has improved substantially over the years however once in a while a piece of check-in baggage does still go missing, end up at the wrong place or get damaged while in transit. A few credit cards will compensate you for such baggage losses/damages however, using an eligible card for buying the airline ticket is mandatory to avail this benefit. There is a related insurance benefit as well - baggage delay insurance. This feature compensates you for items in your luggage that you might need to replace due to delayed baggage delivery or because your suitcase ended up at the wrong airport.
Travel Accident Insurance
Insurance is all about planning for worst case scenarios and you might be eligible to receive compensation for accidents that happen during your travels. A number of leading credit card providers offer complimentary travel accident insurance to their cardholders provided the card is used to book the trip/air tickets. However, there are a number of limits to this benefit which vary from one card to another so the cardholder should consider having more comprehensive disability and life insurance policies in place.
Trip Cancellation Insurance
Unpredictability is an integral part of life and sometimes an illness or emergency can force you to cancel a trip that's been planned and paid for months before. Often you have to shell out quite a bit of cash to make these cancellations. But, if your card offers the trip cancellation insurance benefit, you might be lucky enough to recoup these cancellation charges either completely or at least partially. Obviously, you need to make the entire booking using your eligible credit card in order to qualify for this service. Some key limitations of this benefit include the definition of "emergency" which may differ from one card issuer to another as well as a cap on the total amount that you can claim as reimbursement in lieu of cancellation charges paid.
Automobile Rental Insurance
This is probably the most well known among various complimentary insurance benefits that present day credit cards provide. This is in fact one of the main features that is pitched to a prospective applicant when they apply for a credit card that offers travel benefits. A rented car does come with the option of buying a separate insurance and in case you purchase that, your credit card's complimentary rental car insurance cannot be availed. However, buying a separate rental insurance cover can be quite expensive, while you can get it for free by using an eligible credit card to make your rental car booking.
Things to Keep in Mind When Availing Complimentary Insurance Benefits
Whenever you avail an insurance product, a number of terms and conditions need to be satisfied before you receive a payout from the insurer. While some of these terms and conditions like the definition of an "emergency" for a trip cancellation can differ from one card to another, the definition of a "stolen" item would probably be similar no matter which credit card you use. The following are some key facts to remember about your complimentary insurance benefits:
- The card provider and your complimentary insurance provider are not the one and the same. The insurance benefits on your credit card are underwritten by a separate entity who will handle your claim with your card issuer acting as an intermediary.
- Don't expect the reimbursement payout to happen immediately. As with any insurance reimbursement application, there will a period of waiting involved while your claim is processed. So be patient.
- Make sure you understand the specific terms and conditions of the policy before availing it. In case of certain options like the auto rental insurance, talking to your current auto insurance provider/card company regarding coverage prior to availing the complimentary auto rental benefit can save you a lot of trouble in the future.
- The key documents/information you would need to provide to your card issuer/designated authority in order to raise a claim would include Proof of Loss, description of injury/damage, extent/type of loss, proof of payment method, etc.