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Credit Card Balance Protection Insurance

Whatever you use your credit card for, you could enjoy it more knowing that your repayment obligations could be protected.

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Balance protection insurance is insurance for your credit card that can help you make your repayments when you can’t, whether you lose your job involuntarily, you become disabled or you pass away. Purchasing credit card balance insurance is entirely your choice – it’s not an obligation when applying for a credit card. Moreover, it’s an expensive type of insurance, and it’s not necessary for all credit card owners, especially those who pay off their balance in full each month.

Before purchasing credit card balance protection insurance, it’s important that you read the terms and conditions to understand what situations your insurance actually covers.

What is balance protection insurance?

It is a type of insurance to help you cover your credit card repayments if something unexpected happens and you can’t make them. This includes losing your job involuntarily or becoming unfit for work due to a critical illness or disability. It also helps pay the balance owing if you die.

While having credit card balance protection insurance can provide some relief if you find it difficult to pay back your credit card balance, the circumstances under which the insurance kicks in tend to be very specific. So while it can ease any financial burden to you and your family, you’ll need to read the print carefully and decide if paying extra each month for the insurance coverage is worth it for you.

Credit card balance protection insurance can you help you:

  • Pay or suspend your credit card repayments in the case you involuntarily lose your job, or are unfit for work due to health issues or disabilities.
  • Pay your card balance up to a certain amount as defined by the credit card company if you die.

When should – and shouldn’t – I get balance protection insurance?

When it might be right for you:

  • You have an unsteady or dangerous work situation.
  • Your job provides no salary benefits such as continued salary during illness or disability leave.
  • You want peace of mind and don’t mind paying a premium for it.

When it might not be right for you:

  • You typically pay off your balance in full each month.
  • If you have any existing life insurance or disability insurance coverage in place.
  • If your job pays partial – or full – salary due to any accidents or health problems.
  • You have a fair amount of emergency savings on hand.

How does balance protection insurance work?

This depends entirely on the insurer, but you can expect a waiting period after you lodge your claim. If your claim meets all of the conditions set out in your insurance terms and conditions, the insurer will likely pay up to double your minimum payment on your credit card for most conditions. In the event of death, the balance will likely be paid in full, however it will depend on your insurer and the policy.

How much does balance protection insurance cost?

Different insurers will have different premiums and rates, so it’s necessary to read the Product Disclosure Statement (PDS) for all the costs. That said, most balance protection insurance in Canada costs around $0.99 to $1 per every $100 you owe. This is a very costly type of insurance, and that’s why it’s essential that you consider if you actually need it before you dive in and pay for it.

Here’s an example of how much you would pay if your premium is $1 per $100.

Closing balance at the end of the statement periodMonthly Premium
$0$0
$100$1
$800$8 ($1 x 8)
$1500$15 ($1 x 15)

As you can see above, paying for balance protection insurance greatly increases the cost of having a credit card. Keep in mind this cost is in addition to any fees or interest rates you already pay on your card. By calculating the potential cost of having payment protection insurance, you can determine whether this feature will be useful or not.

What is covered under balance protection insurance?

Each insurer will cover you for a different amount depending on the claims you make. Generally, the amount will be calculated on the balance you owe at the time and what type of claim you made. Here is what you can expect to be covered for:

  • Losing your job involuntarily
  • Facing a strike or walk-out at your job
  • Hospitalized
  • Becoming injured or disabled and are unable to work
  • Being critically ill
  • Death

Eligibility requirements

The eligibility requirements for balance protection insurance will entirely depend on the specific insurer and their policies, however they may specify that you need to:

  • Be over 18 and under 65 years of age.
  • Be employed on a part-time or full-time basis.
  • Be a permanent resident or a citizen of Canada, or hold a valid temporary visa.
  • Have no defaults on your credit history.
  • Have no certain pre-existing medical conditions (this may vary between providers).

How do I apply for balance protection insurance?

If you decide balance protection insurance is right for you, you can typically apply by:

  • Selecting optional balance protection insurance when you apply for a credit card.
  • Calling your credit card provider.
  • Sending a secure message or email via your online Internet banking facility.
  • Visiting a branch in person and requesting an application form.
  • Downloading an application form – available from your credit card provider’s website – and mailing or faxing it to your provider.

How do I cancel my balance protection insurance?

Much like applying for it, you’ll need to call your credit card provider and request to cancel your balance protection insurance. You may also fax or mail a written request to cancel your balance protection insurance. Read your terms and conditions to find out specific instructions on how to cancel your insurance.

Compare credit card providers with optional balance protection insurance

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Benefits with this card Description
SimplyCash Preferred Card from American Express
19.99%
21.99%
$99
N/A
Earn 2% cash back on all eligible purchases
Earn 10% cash back on all eligible purchases (up to $400 in cash back) for the first four months of Cardmembership.
Tangerine Money-Back Credit Card
19.95%
19.95%
$0
$12,000
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
American Express AIR MILES Platinum Credit Card
20.99%
21.99%
$120
N/A
Earn 1 AIR MILE for every $5 spent on eligible food, drink, gas and transit purchases (up to an annual spend of $30,000), and earn 1 AIR MILE for every $10 spent on all other eligible purchases (and after the $30,000 annual spend)
Earn a Welcome Bonus of 3,000 AIR MILES when you spend at least $1,500 in eligible purchases within the first three months.
HSBC +Rewards™ Mastercard®
11.9%
11.9%
$0 annual fee for the first year ($25 thereafter)
N/A
Earn 2x the rewards on eligible dining and entertainment.
Earn 30,000 Points ($150 travel value), plus get a full annual fee rebate for the Primary Cardholder for the first year ($25 value). Apply by March 29, 2021. Conditions Apply. This offer is only available to residents of Canada other than the province of Quebec (Quebec residents eligible for separate offer).
HSBC World Elite® Mastercard®
19.9%
22.9%
$0 annual fee for the first year ($149 thereafter)
$80,000
Earn 3% in travel rewards on all eligible travel purchases (6 Points per $1 spent) and earn 1.5% in travel rewards on all other eligible purchases (3 Points per $1 spent).
Earn up to 40,000 Points ($200 travel value), plus a full annual fee rebate for the Primary Cardholder for the first year ($149 value). Apply by March 29, 2021. Conditions Apply. This offer is only available to residents of Canada other than the province of Quebec (Quebec residents eligible for separate offer).
Tangerine World Mastercard
19.95%
19.95%
$0
$60,000
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
BMO Rewards Business Mastercard
14.99%
22.99%
$0 annual fee for the first year ($120 thereafter)
N/A
Earn 3 BMO Rewards points for every $1 you spend on gas, office supplies, cell phone bills and internet bills, and earn 1.5 BMO Rewards points for every $1 you spend elsewhere.
Get up to $470 in value in your first year. Get 50,000 BMO Rewards points when you spend $5,000 in the first three months. Plus, the primary cardholder will get the first year $120 annual fee waived.
BMO Air Miles Business Mastercard
19.99%
22.99%
$120
N/A
Earn 1 Air Mile on every $10 spent on eligible purchases.
Get up to 3,000 AIR MILES Bonus Miles ($310 towards your purchases with AIR MILES Cash).
American Express AIR MILES for Business Card
N/A
N/A
$180
N/A
Earn 1 AIR MILE for every $10 spent at eligible AIR MILES Sponsors and 1 AIR MILE for every $15 spent elsewhere
Earn a Welcome Bonus of 2,000 AIR MILES when you spend at least $5,000 on eligible purchases within the first three months
Business Platinum Card from American Express
N/A
N/A
$499
N/A
Earn 1.25 Membership Rewards points for every $1 spent on eligible purchases
Earn a Welcome Bonus of 50,000 Membership Rewards points when you charge $7,000 in purchases to your Card in your first three months of Cardmembership.
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