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?
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 cardholderÂ’s death or permanent or temporary disability; these various types of insurance are often combined into one policy, called simply Â“credit insuranceÂ” or Â“credit protection.Â” 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 Â“involuntaryÂ” 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.