How Does Credit Card Travel Accident Insurance Work?

Your credit card might provide insurance for airline accidents.

Your credit card might provide insurance for airline accidents.

Paying for your domestic or international trip with a major credit card can provide you or your loved ones with a cash benefit if tragedy strikes. Unfortunately, the travel accident insurance offered by credit card companies typically pays only if the cardholder suffers serious injury or death. If such a calamity is your fate, having this insurance is probably better than the alternative -- someone waiting years to receive a settlement from legal action against the travel provider responsible for your demise or dismemberment.

Features

The most common type of travel accident insurance through credit cards will pay cash to your family only if the accident occurs on your airline, train, cruise ship or similar public mode of transportation. If you somehow survive a plane crash or the sinking of your cruise ship, you can file a compensation claim for any serious injury that incapacitates you. The benefit is usually available as a fixed amount per body part and per accident. Benefits range from a measly $100,000 to $1 million, according to Bankrate. If you don't survive the accident, your spouse, children or other beneficiaries collect a fixed death benefit.

Activation

Travel accident coverage comes automatically with some credit cards. If you're not sure what yours covers, contact the customer service department for the card. That will be faster and easier than trying to read the fine print on your credit card statement. In other cases, you must elect or decline coverage at the time of payment. When you make your purchase, you might receive notification from the credit card company of the coverage and the claim procedures.

Costs

The major credit card providers, such as MasterCard, Visa, American Express and Discover, often include travel accident insurance on all accounts. However, you might incur fees if you actually use this benefit on a basic card account. Premium level cardholders, the people with American Express Platinum and Visa or MasterCard Gold cards, may get hit with fees too. However, they also get more travel benefits with those cards.

Considerations

You can't predict the fate of your flight or cruise. When the travel accident coverage is free with the card, accepting the benefit is a no-brainer. When you have to pay for the coverage, compare the card benefits against standard travel insurance from independent companies. For the same price, you could get a comprehensive policy that will cover all kinds of travel contingencies. For example, if you have an accident at your vacation spot, this policy will take care of you while the credit card policy will not.

About the Author

Carol Luther has more than 25 years of business and technical writing experience and 10 years of experience in international health project management, which includes child survival, youth AIDS and health systems information technology. Luther's work has appeared in "Diamond" magazine and online at Global Progress, Mahalo, Trazzler and Wcities. She has a master's degree in public and international affairs from the University of Pittsburgh.

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