Last Updated on August 11, 2022 by user
Although it is not as common, getting credit shield insurance can be a beneficial option to consider, especially in times with so much uncertainty. After all, you might face any life adversities that will affect you for the rest of your life at any point and not see it coming. In that case, having financial protection from your bank is crucial.
One of the main reasons people hold back from getting credit shield insurance is from lack of knowledge of how it actually works and understanding its potential. A credit shield is an optional insurance program or facility for credit cards offered by financial institutions where, in unforeseen and unfortunate circumstances, cardholders’ dues are taken care of. Every bank has several credit shield options, but generally, this type of insurance will protect and cover you for:
- Natural death or permanent disability (due to sickness): coverage varies for a total outstanding amount of around AED 200,000
- Accidental death & permanent total disablement (due to accident): coverage varies for a total outstanding amount of around AED 200,000 and additionally AED 200,000 should be payable to the cardholder.
- Temporary disability: covers a minimum monthly instalment of 5% or AED 1,000 that’s due to the bank, excluding the first 30 days after getting disability, for a period of three months.
- Critical Illness: covers 100% of the sum insured of maximum AED 200,000
- Hospitalization: covering medical expenses of AED 100 per day for a period of 30 days
- Involuntary loss of employment: coverage varies from 10% or more of the outstanding balance each month for a maximum period of 12 months. The maximum benefit should not exceed AED 48,000. (this option will not be covered if dismissal is due to performance or misconduct)
Since credit shield programs, premiums and benefits vary from bank to bank, being aware of your monthly charges will help justify whether its benefits are worth the additional expense. Below are some of the different options that major UAE banks offer for credit shield cover:
- HSBC
- Insurance Provider: MetLife Alico
- Cost: 0.60% of monthly outstanding credit balance
- Benefits and cover:
- In the event of death or permanent total disability, waiver of the outstanding balance up to a maximum of AED 200,000.
- Additional payment of up to AED 55,000 directly to the cardholder or beneficiaries in the event of death, permanent total disability or critical illness of the primary cardholder.
- In the event of loss of employment or temporary total disability, 15% of your monthly outstanding balance for up to 6 months. Additionally, monthly payments of maximum AED 3,000 towards your utility bills will be covered for 6 months.
- Citibank
- Insurance Provider: MetLife Alico
- Cost: 0.79% of monthly outstanding credit balance
- Cover and benefits:
- In the event of death, permanent and total disability or critical illness, waiver of the outstanding balance up to a maximum of AED 350,000.
- In the event of involuntary loss of employment or temporary total disability, minimum due payments up to a maximum monthly payment of AED 2,750 for 6 months. The maximum benefit paid should not exceed AED 8,250.
- In the event of total temporary disability, one monthly instalment is payable for a period of 30 days after waiting period. The maximum amount per month is AED 2,750
- Emirates NBD
- Insurance Provider: Abu Dhabi National Insurance Company
- Cost:0.80% of monthly outstanding credit balance
- Cover and benefits:
- In the event of death or permanent total disability, waiver of the outstanding balance up to a maximum of AED 100,000.
- In case of involuntary job loss, there will be a monthly payout of 10% of the outstanding balance for 12 months.
- In the event of total permanent disability, there will be a payout of AED 200,000.
- In the event of hospitalization due to an accident, a payout of AED 100 each day will be covered for a maximum of 30 days.
- RAKBANK
- Insurance Provider: Union Insurance Co.
- Cost: 0.99% of monthly outstanding credit balance
- Cover and benefits:
- In the event of death, permanent total disability or critical illness, waiver of the outstanding balance up to a maximum of AED 500,000.
- In the event of involuntary loss of employment, up to AED 8,000 will be covered per month for a maximum of 12 months.
- Mashreq
- Insurance provider: Oman Insurance Co.
- Cost: 0.89% of monthly outstanding balance
- Cover and benefits:
- In the event of involuntary loss of employment, up to AED 4,000 per month will be covered for a period of 12 months
- In case of hospitalization due to an accident, an amount of AED 200 per day will be covered for up to 60 days
- In case of death or disablement, coverage will be up to AED 50,000.
*One thing to keep in mind is that usually banks automatically enroll credit card holders in the credit shield program; so be sure to ask about this when you sign up for a new credit card.
The bottom line
If you already have similar insurance benefits under your plan or you’re self employed, credit shield cover might not be the best option for you, but rather an expense. But even if it’s not a must-have for all credit card holders, it’s an important benefit to consider, as some banks can provide you with additional cash benefits and can actually help you deal with financial stress while facing difficult situations.