Published October 24, 2023 • 6 Min Read
Insurance is one way we can prepare for the unexpected. Credit card balance protection insurance can help safeguard credit card users in some situations where paying their credit card bill may be a financial challenge.
Unanticipated events such as job loss or illness can make it difficult to make regular credit card payments. During these times, credit card balance protection insurance can help pay off or reduce your balance (and your financial stress levels).
Key takeaways
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Credit card balance protection insurance is optional insurance that can help protect credit card users from the financial impact of certain unforeseen circumstances.
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Depending on the specific types of coverage included, it can help to reduce or cover your credit card payments if you lose your job, become totally disabled, or die.
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Using a credit card with credit card balance protection insurance might be a good idea if you don’t have other types of insurance that will cover your credit card financial obligations if the unexpected occurs
What is credit card balance protection insurance?
Many banks, including RBC Royal Bank®, offer credit card balance protection insurance as an add-on to their credit cards. These are optional plans that protect your outstanding balance (the amount you owe on the card). If an insured event occurs (such as job loss), you can file a claim with the insurer, and any approved benefit would be applied to the credit card account to help reduce or pay off your credit card balance.
Why do people get credit card balance protection insurance?
Like so many types of insurance, credit card balance protection can provide you with a level of security. You may not be able to predict unexpected events, but you can, to a certain extent, plan for them.
The benefit of insuring your credit card balance is that if job loss, total disability, or loss of life occurs, your finances may be protected to a greater degree. Credit card balance protection insurance can help you make payments on your credit card if you, for example, lose your job. It’s a way to get back on your feet faster and is one less thing to worry about when unfortunate and unanticipated events such as these happen.
Here’s an example: Let’s say you’re let go from your job when your company downsizes. Here, your credit card balance protection insurance coverage may step in to pay a certain amount of your balance for a set period of months (the payment amounts and length of coverage time depend on your particular insurance coverage).
Credit card balance protection insurance can help to ensure you don’t miss credit card payments (which can jeopardize your credit score). The benefits are non-taxable, so the entire amount you’re eligible for goes toward paying down your credit card balance.
When is a good time to consider credit card balance protection insurance?
Usually, credit card balance protection insurance is purchased when you apply for a credit card or during credit card activation, but you can add credit card balance protection insurance any time afterwards.
Am I eligible for coverage?
That depends on your bank or your financial institution. The BalanceProtector Max Insurance* plan offered by RBC Royal Bank® covers the primary RBC cardholder. If that’s you, you must be a resident of Canada who lives in the country for a minimum of six months a year and be between the ages of 18 and 64 years. You must also be employed or self-employed for at least six months with a registered company and be actively working for a minimum of 16 hours each week for your salary or your wages.
Corporate cards, business cards, expenses cards, and non-Canadian currency cards are not eligible for insurance coverage.
How much does credit card balance protection insurance cost?
The cost of credit card balance protection insurance can vary significantly based on the credit card issuer, the terms of the protection plan, and your credit card balance. Some financial institutions charge a fixed rate per $100 of your card’s balance, while others may offer a reduced premium if your card’s balance is below a certain threshold. You can find more information on BalanceProtector Max Insurance here and see an example of a simple pricing rate based on a card’s balance.
Is credit card balance protection insurance worth it?
Ask yourself a couple of questions such as these to decide whether credit card balance protection insurance is worth it:
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“If the unexpected happens, do I have enough savings to cover my credit card bills?”
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“What other types of insurance do I have (such as disability insurance or insurance provided by my employer), and does that insurance provide me with enough coverage to pay my credit card bills should the unexpected happen?”
BalanceProtector Max Insurance is a credit card balance protection insurance exclusively for RBC cardholders. It’s an optional add-on insurance coverage available to anyone who meets the eligibility requirements. Coverage can be cancelled at any time, and premiums are only charged if the credit card account balance is $10 or more at the time the credit card statement is issued.
How do I apply for coverage?
Applying for BalanceProtector Max Insurance is simple. If you already have an RBC credit card, you can apply online by logging in to RBC Online Banking, selecting the card you’d like coverage for, and filling out the online form available under the Security and Card Management section labelled “Get/View Balance Protection Insurance.”
You can also apply for coverage at your local RBC branch or by phoning 1-800-769-2512.
How do I make a claim?
To make a credit card balance protection insurance claim, BalanceProtector Max Insurance clients have a couple of options: file a claim online, or do it over the phone by calling the insurer directly at 1-888-896-2766.
A credit card with credit card balance protection insurance may help you to financially prepare for unforeseen events. It’s an ounce of prevention that can turn out to be worth a pound of cure.
* Underwritten by American Bankers Insurance Company of Florida and American Bankers Life Assurance Company of Florida, which carry on business in Canada under the trade name of Assurant®. RBC Royal Bank® receives compensation for distributing this insurance coverage.® / ™ Trademark(s) of Royal Bank of Canada. ® Assurant is a registered trademark of Assurant, Inc. Used under licence.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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