Insurance perks on credit cards

In 2005 the Financial Services Authority (FSA) assumed control over the UK's general insurance marketplace. It led many credit card providers to withdraw insurance perks on their products, companies fearing the worst from the FSA's new insurance regulations.

But, despite the upheaval in the insurance marketplace, several providers continue to support insurance perks. Insurance cover like travel insurance and travel accident insurance are still included on some offers, helping to give these card providers a unique appeal in a very competitive marketplace.

How do insurance perks work?

Insurance perks are insurance-led marketing freebies designed by credit card companies to attract customers to their cards. Normally, card companies have agreements in place with insurance underwriters. These are mutual agreements between card companies and insurance companies, from which both companies profit.

One of the most popular types of insurance perks offered as part of these agreements between card companies and insurance companies is travel accident insurance. When consumers buy travel tickets, they receive free travel accident insurance from the credit card provider / insurance company. The insurance is valid for the duration of the tickets purchased by consumers, gaining free travel accident insurance for accidental death and serious injury / disability.

For travel accident insurance, different credit cards have different insurance limits on their insurance policies. Typically though, accidental death of consumers who are eligible for the insurance trigger payments of up to £250,000. Loss of two limbs, loss of eyesight and accidents resulting in permanent disability typically trigger pay outs of £125,000 for credit cards holders eligible to claim under the insurance policy.

As with all types of insurance policy, travel accident insurance carries insurance provisos. Consumers or representatives of consumers are only eligible to claim on the insurance if details of the insurance claim are filed with credit cards companies within the time period dictated by the underwriters. Insurance claims where death or serious injury of account holders resulted from suicide or self-inflicted injuries are generally not entertained by credit card companies / insurance underwriters. Credit cards companies and insurance underwriters also will not pay out on the insurance if insurance claims from account holders or representatives of account holders are made because of war or invasion.

Which credit cards offer insurance perks?

There are a number of card companies still offering insurance perks on their credit cards. Among these who offer free insurance on some of their products are Morgan Stanley and Royal Bank of Scotland.

As of June 2005, HSBC too have entered the free insurance marketplace. The bank is offering its holders free price promise insurance, this insurance provides consumers with the ability to claim refunds on the insurance if consumers buy branded goods with their HSBC credit cards, but then find the same items cheaper elsewhere. There are several other card companies offering similar insurance to this on their credit cards as well.

Insurance perks on credit cards it seems will be with us for a while yet!