Insurance on Card
R C Gupta
Mr. Singh owned his first credit card when private banks started providing it for an annual fee and the credit card usage was growing in online and offline market. However with the passage of time, banks turned themselves into “one – stop shop”; offering variety of products and services like utility bill payment, investment management, insurance, credit & debit cards so on and so forth. Mr. Singh has an account with a public sector bank which offered credit card without any annual fees and higher credit limit than previous card. One day he received a call from the card company offering him ‘protection insurance’ of Rs. 6,00,000/- at a nominal premium of Rs. 47/- approximately as an add on service on the card. The insurance primarily covered death/disability due to accident. He accepted the offer and paid the premium regularly. Meanwhile many banks started offering ‘card-on-card’ facility, with different schemes. Now he had almost four of them but he seldom used any of his cards for making his purchases. A year later, Mr. Singh received another call from the card company and he was offered ‘Suraksha Plan’ (The plan was specifically designed and delivered by the bank’s insurance arm to its credit card holders). The plan offered cover of Rs. 3,00,000/- for 5 years, double personal accident cover on death, required no medicals, age proof or salary slip and claim acceptance was guaranteed. The premium of Rs. 2,565/- was to be paid only once and further provided for flexi-pay option in which the amount could be paid in easy installment of 12 months (Rs. 235.12/- approximately per month) and the premium paid was eligible for rebate under Income Tax Act. The plan was in addition to the existing ‘protection insurance’. The policy documents were to be delivered within 21 days of acceptance. Looking to all the benefits Mr. Singh accepted the policy with flexi-pay option and paid his first installment that was debited on his credit card....
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