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Information and Advice on Credit Card Insurance Refusing to Pay

I have this credit card, and I have insurance with them to cover unemployment but they don't want to pay. What should I do?

Hi, Bill.  I have this credit card, and I have insurance with them in the event I lose my job or get laid-off, that they will pay for it.  They are now refusing to pay. What should I do? Should I talk to attorney?

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Highlights

  • Facts about credit card insurance
  • Is default insurance worth the expense?
  • When does it make sense to get insurance for a credit card?
  • How to handle an insurance firm who won't honor claim

The type of insurance you describe, which will make your minimum payments on your account if you become involuntarily unemployed, is offered by most credit card issuers. Similar insurance policies frequently cover payments in the event of the cardholder’s death or permanent or temporary disability; these various types of insurance are often combined into one policy, called simply “credit insurance” or “credit protection.” While credit insurance can be helpful for some consumers who happen to lose a job unexpectedly or who are injured and become disabled, this type of insurance is not a good buy for the vast majority of consumers who will never use it. Most of these policies cost only a few dollars per month (usually calculated as a small percentage of your outstanding balance), but that money can easily add up to a significant amount, especially for consumers who have such policies on numerous accounts.

The fact that credit card companies strongly promote and sell credit insurance is a clear indication that credit protection is of more benefit to the creditors than it is to consumers. For most consumers, it is better to purchase additional life and disability insurance from conventional insurers rather than buying credit protection insurance from their creditors. Conventional insurance will provide you with more flexibility and is more tightly regulated than most credit insurance policies. In your case, you have already purchased credit insurance so whether or not it is a good value is a moot point, though I would encourage you to do additional research before buying any credit protection insurance in the future.

One way that creditors deny credit insurance claims for unemployment is by stating that the consumerÂ’s unemployment is not “involuntary” as required by most policies. For example, the creditor may argue that the consumer quit their job voluntarily rather than being laid off, especially if the consumer cannot produce clear evidence to the contrary. Since your creditor has denied your seemingly valid insurance claim, I strongly encourage you to consult with an attorney licensed in your state to discuss your rights in this situation and the remedies available to you. If the creditor or the insurance company (if it is a separate entity) continues to refuse to make the payments required by your policy, your attorney may recommend that you file suit against the creditor or the insurer to force payment of your claim. In addition to consulting with an attorney, you may wish to take other action to try to convince the creditor to pay your claim. For example, you may want to file a complaint with your state Attorney General’s office explaining the situation and why you feel the claim should be paid. Receiving a complaint from an official state agency may compel the firm to honor your claim.

If you determine that your claim is invalid for some reason, you may need to seek alternative options to resolve this debt, especially since you are currently unemployed. For more information about the various options available to consumers struggling with their debts, I encourage you to visit the Bills.com debt help page.

I wish you the best of luck in resolving this dispute and in finding new employment, and hope that this information helps you make better money decisions in the future.

Best,

Bill

www.bills.com/

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2 Comments

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  • 35x35
    Apr, 2009
    Sam
    You should strongly consider retaining an attorney to represent you in your claim against the insurance company. Being represented by an experienced attorney in an insurance dispute can significantly increase your chances of reaching a favorable settlement with the insurer and, if your are forced to file a lawsuit, of winning your case. Your attorney may also be able to assist you in filing a claim against your employer for wrongful termination. Being unemployed, you may qualify for reduced fee legal services from your local Legal Aid society. Many attorneys will also take employment law cases on a contingency basis, meaning that you don't pay any fees up front, if they think that there is a good chance of winning the case. You should contact you state or county Bar Association to inquire about a referral to an attorney who can assist you with your claims. I wish you the best of luck!
    0 Votes

  • 35x35
    Apr, 2009
    Hmany
    Hello. I have a line of credit with Bank of America. I called them on March 10, 2009 after having been wrongfully terminated in retaliation to a law suit against my employer and individual co workers. I called the bank insurer for my line of credit and they said that on a previous call to them - I had requested my employment part of the credit protection cancelled and that I had disability protection instead. I told them that I never had requested my employment protection terminated. Anyway I got two different stories for that about FIC Cards who handles Bank of America. Then I received in the mail another protection asking me to sign dated March 16, 2009 which was a request for new coverage. I never signed nor requested such coverage for employment insurance which is suppossed to cover me for lost of employment. What Can I do?
    0 Votes

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