Home > Credit Cards > Reader Question: Credit Card Debt Protection Program Won’t Cover My Spouse’s Death?

Comments 0 Comments

A reader runs into a major problem when trying to take advantage of the benefits she thought she had under her credit card debt protection plan after her husband’s death. What can she do?

Q: My husband and I were joint account holders on our Chase United Mileage Plus credit card. All of our statements from the credit card company listed both of our names, not just mine.

Months ago I enrolled both of us in their Payment Protection Plan, and during a phone conversation I checked approximately three times to see that both my husband and I were covered. (The representative said) Yes. Yes. Yes. Unfortunately my husband passed in his sleep in December 2010, but when I processed the claim I was advised that he wasn’t covered. They told me I did have a four-month grace period to pay the bill.

Numerous letters to the company offered no response and/or relief. I even wrote to Chase and again, received no answer. Then on their own, they offered me a complete refund for my insurance payments. This is incorrect. I don’t know where to go with this problem.

[Fraud Resource: Free Identity Risk Score and personal risk profile]

A: Please accept our condolences on your husband’s death. First a little background on this question: credit or debt protection programs are offered by all the major credit card companies. According to a GAO report, cardholders paid about $2.4 billion for debt protection products with the top nine card issuers in 2009. These programs typically cancel balances or payments, or suspend payments, when a qualifying event—job loss, disability, or death, among others—occurs. Minimum payments are often suspended in the case of unemployment, for example, while the balance is often canceled if the borrower dies.

These programs are not “credit insurance,” which means they do not fall under the scrutiny of state insurance regulators. Most consumer advocates don’t recommend them because of their high cost and what they believe is a lack of adequate consumer protections. The amount consumers pay for these programs is high compared to the benefits they collect. The GAO report for example found that, “In the aggregate, cardholders received 21 cents in tangible financial benefits for every dollar spent in debt protection product fees among the nine largest issuers in 2009.” Instead, advocates encourage borrowers to use the money they would have paid toward a credit card protection plan to build an emergency savings account and/or fund a life insurance policy. “These programs aren’t a good idea,” says J Robert Hunter, director of insurance for the Consumer Federation of America.

[Article: Collecting Debt From Those Who Have Died: FTC Weighs In]

Your problem raised an interesting question, though. When you purchase credit protection for a joint account, are both borrowers typically covered? I had a hard time tracking down experts who could speak to that specific issue. Birny Birnbaum, an insurance advocate with Center for Economic Justice said in an email:

Payment Protection is sold on a single borrower basis or joint borrower basis. The cost is different—joint coverage is higher. The documents they received—the loan amendments covering debt cancellation and debt suspension—should specify whether there is single or joint coverage. Another way is to check how much was paid—it would indicate whether they were charged for single or joint coverage. Something around 90 cents per hundred of outstanding balance is single, something well over $1.00 per hundred for joint.

Birnbaum also added this thought:

With a joint account, single coverage seems implausible because the loan agreement would have to specify which of the two borrowers is covered.

[Featured Product: Looking for credit cards for fair credit?]

Reader Question (cont.) »

Image: Andres Rueda, via Flickr.com

Pages: 1 2

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team