CRI insurance covers some or all of a customer’s outstanding credit card repayments in some circumstances, including bankruptcy, redundancy, injury, illness or death.
But many exclusions and prescriptive conditions are applied when claims are made, so customers may not receive the benefits they are expecting – and these benefits reduce significantly after age 65.
While there may be the occasional case where this kind of insurance is suitable, credit card issuers are no longer offering this CCRI insurance to new customers. It’s estimated that 200,000 New Zealanders already have CCRI insurance, spending up to $20 million a year on premiums.
We’re encouraging anyone who may have this kind of insurance to talk to their credit card provider or financial adviser to see if it’s still suitable.
You can see if you’ve got CCRI insurance on your statement
Credit card repayment insurance is organised by whoever issued you the card – not Visa or Mastercard for instance, but a bank, insurer or other financial company. When it was being sold, this kind of insurance often required just a quick check box to purchase – so you may not realise you still have it.
Check your next credit card statement or look online with your bank or credit card provider. If you’re being charged for CCRI insurance then it should be clearly itemised out as a premium charge, not included in with other interest payments. But it will only show if you have a balance owing on the card. If you have CCRI insurance but no balance owing, then you won’t be getting charged any premium.
Most credit cards are issued by banks, but it’s not just them that sold CCRI insurance. Many of the customers with non-bank credit cards – such as from a retailer or finance company have also been sold CCRI insurance.
CCRI insurance costs go up as your credit card debt increases
The cost of CCRI insurance depends on how high your credit card balance is – if you owe a lot on your credit card then you could be paying hundreds of dollars a year in CCRI insurance premiums. Some providers put a cap on the premiums, but not all.
Check with your provider about whether it’s worth having
Because it’s no longer being sold to new customers, your credit card provider might cancel the CCRI insurance at its next annual renewal. They will tell you if they’re cancelling this insurance and seek your approval.
In this case no more premiums will be charged from this date and you’ll no longer have this kind of insurance. However, you may want to check with them directly to be sure, and so that you can stop paying straight away.
If you have confirmed there is a CCRI insurance policy on your credit card, talk to your credit card provider or financial adviser about whether it’s worthwhile continuing with it.