By John Campbell

Many credit card companies now offer a variety of insurance policies that offer limited account protections to consumers under certain circumstances.

The four primary credit card insurance policies include:

• Credit life insurance

• Credit disability insurance

• Credit property insurance

• Involuntary unemployment insurance

The usefulness of these credit card insurance policies is debatable. For starters, they can be very expensive. If you want to protect each of your credit cards you may need to take out multiple credit card insurance policies, which can rack up your costs very quickly. A life, disability or renters or homeowners insurance policy from any reputable insurance company may be cheaper in the long run and provide you with much more comprehensive financial protection. You need to consider your own personal financial situation before deciding whether or not one of these policies may be useful to you.

If you have a standard life insurance policy, you may already have more than enough coverage to pay off any of your debts and take care of the immediate or long-term financial needs of your heirs or beneficiaries. A credit life insurance policy will only pay off your associated credit card debt in the case of your death.

If you have a standard disability insurance policy, you may already have more than enough coverage to take care of your debts in the event you become disabled. A credit disability insurance policy will only make your minimum monthly credit card payment for a set period of time if you become disabled. If you become permanently disabled, you’ll be no better off in the long run if you can’t raise enough money to pay your debts before your credit insurance lapses.

If you have a renter’s or homeowner’s insurance policy, you should have enough coverage to replace any of your personal possessions in case of certain specified disasters. With credit property insurance, any remaining debt on a specific item purchased with the associated credit card account will be wiped out if the item is damaged or destroyed due to certain specified disasters. There are typically no deductibles for any destroyed items covered by credit property insurance. Although a renter’s or homeowner’s insurance policy should be sufficient to cover the loss of any item, a credit property insurance policy may make a good backup policy if you have any credit card debt associated with some big ticket items. With both insurance policies in place you’ll be able to get any covered item replaced and may also wipe out any debt associated with the item.

If, like many consumers, you live paycheck-to-paycheck or you work in a career field in which there is a greater chance of being laid off, you may want to consider involuntary unemployment insurance. The minimum monthly payment will be made on any associated credit card account for a limited time if you’re laid off or fired from an employer due to no fault of your own. This policy may provide you enough time to get back on your feet and start making your credit card payments when your employment situation improves. If you’re currently unemployed when you apply for this insurance, you won’t be able to file any current claims.

If you don’t sign up for a credit card insurance policy when you first apply for a credit card, chances are you’ll receive several policy solicitations through the mail or over the phone. Mail solicitations often include checks for a small sum of money. By cashing these checks you’re indicating your acceptance of the offer and will automatically be enrolled in whatever insurance is being marketed to you. If you don’t want the policy, don’t cash the check.

Don’t fall for aggressive sales tactics from telemarketers who may try to convince you that you can’t afford to be without the insurance policies they’re offering. Don’t buy into the hype. Before you agree to start any policy you should find out exactly what the policy will pay for under what conditions, if there are any restrictions or unusual terms and conditions, what the cost will be and how you can cancel the policy. Only buy if a policy makes good financial sense for your own particular situation.

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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.