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No Free Insurance Cover On Credit Cards
Posted by Pradeep Sadanapalli | December 29, 2007 | 498 views
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Loading ...If you’ve been banking on the insurance cover that came free with your credit card, it’s time to evaluate that. Most credit cards offered by banks no longer have a free insurance (life or non-life) cover and many customers may not have read the fine print to realise that they no longer have insurance protection.
Take the case of R Rao, a media professional, who recently received his monthly credit card statement from HDFC Bank. Apart from the details of the transactions made in the year, Rao was surprised to see a notification from the bank that effective January 1, 2008 the complimentary insurance covers on his Platinum Plus card will be withdrawn.
So far, Rao has been depending on a Rs 1 crore cover due to air accident, Rs 5 lakh in case of a rail or road accident and Rs 50,000 for hospitalisation due to accidents. The only facility that continues on his card is a nil loss/stolen card liability cover which he gets after he reports the loss or theft. Rao will now have to seriously evaluate his insurance needs and make sure he’s adequately protected. HDFC Bank like other banks (private and public) started withdrawing the insurance cover benefits sometime in 2006.
Says Parag Rao, executive vice-president, head (cards portfolio and product management), HDFC Bank: “Customers were not viewing this as a value addition. In fact we found that the hassle of filing and settling claims was creating a dissonance among customers..” The other big reason for banks like HDFC, ICICI, Standard Chartered and even Citibank to withdraw this facility is that at some point in 2006 credit cards started being offered free for life, i.e without any annual charges. A Citibank spokesperson said that most banks withdrew the freebies due to the issue of costs. Since the insurance cover offered would be a group cover, it would be at a subsidised rate and would come with various inclusions and exclusions. The bank would have worked out the annual charges including some amount of the premium. With the annual charge being lifted, the premium would have to borne by the bank.
ICICI Bank too withdrew the insurance covers on its classic or basic cards last year. However, like some banks, ICICI has continued to offer insurance covers on some of its exclusive cards. On the recently launched Signature Card, which has an annual fee of Rs 25,000, the card holder gets a personal accident cover in case of air accidents worth Rs 3 crore. But the fact is that this card is not free.
The insurance cover on non-premium cards was discontinued by Standard Chartered Bank from September 2004. It launched new card products that provide value to customers through other offerings . But they do not offer an insurance cover.
SOURCES:
Times of India
Topics: What's UP, The Facts |
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