Credit card insurance a gimmick

November 20, 2011 

Dear Dave,

I've got my $1,000 emergency fund in place, and I'm working toward paying off my debt. I was wondering what you think about credit card insurance offered through the card companies? It doesn't sound like a bad deal if they'll make the minimum payment for you if you become disabled or unemployed.

- Terri

Dear Terri,

Credit card insurance is just another gimmick, so I think I'd pass on that if I were you. I don't buy gimmicks.

Here's the deal. You should already have long-term disability insurance through your employer. If you don't, then you need to get it today. That way you're already covered and can make the payments if you happen to become disabled somewhere down the road.

Remember, you're also working your way out of debt and building your emergency fund. So in a sense, you're going to use your emergency fund as insurance against bad things happening while you knock out that debt and beyond.

- Dave

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