Do you qualify? You could be paying the monthly premium even if you don’t qualify for coverage. Read the fine print in your certificate of insurance, sent to you after initiating the account.

For example, let’s take a look at TD Canada Trust Credit Card Balance Protection Insurance, provided through Assurant Solutions (aka American Bankers Insurance Company of Florida) 

Qualification

  • age restriction 18-65 at time of enrollment
  • at age 66 only accidental death is covered and all other coverage is terminated
  • a Canadian resident
  • the primary Account holder of the applicable TD credit card
  • employment to qualify for job loss protection: working for salary or wages of 25 hours or more per week (not student, part-time or self-employed)

Benefit Coverage
1. Covers minimum payments in the event of involuntary job loss or total disability

  • the greater of 3% balance monthly or minimum payment, for up to $10k or 24 months maximum
  • the payment remains the same after the second month, meanwhile interest charges on the balance and insurance premiums continue (unless you cancel the insurance, and benefit payouts will continue)

2. Pays the balance in the event of death, dismemberment or critical illness

  • the balance up to a maximum benefit of $10k (even if you have multiple accounts that you pay protection on, your maximum payout from the same insurance company will still be $10k)
  • specific circumstances of death and conditions of illness apply, as well as time frame restrictions from time of enrollment
  • for example, cancer must be considered life-threatening and must not have any symptoms or medical consultation prior to diagnosis within 90 of insurance enrollment
  • not qualified for critical illness coverage if you have ever been previously diagnosed with the same type of Critical Illness (ie cancer, stroke or heart attack)
  • dismemberment coverage only applies to the loss of 2 (or more) limbs/eyes. 1 limb is not enough, and hands and feet don’t count either, it must be above the ankle or wrist.

Cost
The cost for TD’s regular plan is $0.89 per $100 balance, plus tax, calculated daily. TD’s Plus plan is $1.20, and other plans may be as high as $1.50 per $100 balance. So even if you pay your balance on time every month, there will still be a charge for the insurance premium on the daily balances.

Conclusion
Since you need balance protection for each separate card, it may be more economical and beneficial to have one insurance plan to cover all debts.

Also be aware that if you have other insurance coverage, your balance protection insurance may not qualify for payout. If your Credit card insurance is listed as “supplementary”, it will be paid out secondary to other home, auto or medical coverage you may already have (meaning all other sources of insurance, recovery or indemnity must be exhausted before credit card insurance pays any benefits to you).

It is also interesting that balance protection insurance is a very large source of revenue for banks and creditors. Perhaps the “protection” is more about protecting the bank’s money than yours? Check your statement, read the fine print, compare your insurance alternatives, and decide for yourself.

One mistake that is being made about the money tree this year is the perception that only some European governments and the US are perched on top of a mountain of impossible debt. Somehow, if the government actually falls into the financial abyss, that’s okay. That’s somebody else’s problem. Let them eat, well, Christmas cake.

Santa, unfortunately, has to worry about the price of food; gas; the cost of housing; escalating property, transit and income taxes; interest charges on mortgages and consumer debt, rising fees, school expenses, health care and even retirement. Why? Because the real Santa is you and me.

If we get real, as juxtaposed to fiction, then the best gift we can give to our families and ourselves is a well-thought out, realistic family budget. 

You might be surprised to learn our Canadian consumer debt ceiling has almost reached $500 billion. As published by the Bank of Canada, by November 30th 2012 we owed $496 billion in consumer debt, (seasonally adjusted). 

10 years ago it was $204 billion. 

These are both huge figures. How did the debt levels get so high? How did they more than double in 10 years? What do we do now?

I thought that the frightening prospect of the US automobile industry collapsing and financial institutions failing in 2007-08 would capture our attention and get us tuned-in to the realities of debt. 

We approach the end of a turbulent year financially in Canada. A slowdown in real estate sales and home equity growth have unceremoniously arrived. Fear ripples through the middle class and lower income groups. Many worry about how to cope with rising costs, pay down their debt and plan for the future.

2012 may be remembered as the year of the family budget. It can begin with setting limits on how much will be spent on Christmas presents for everyone – an affordable figure based on income and savings, not borrowing on lines of credit or using credit cards. We may decide to only give children gifts and celebrate with our friends and relatives.

Perhaps this is a good year to introduce the B word (B for Budget) at the family table. Let’s talk about money, our real expenses and utilize the collective wisdom of our friends, parents, grandparents and loved ones. Let’s make getting out of debt a family project – how to get the best prices for our consumer goods and services, how and where to shop, how to make a list and checking it twice before leaving home and going to the mall or grocery store – and sticking to it.

Yes, let’s invite the real Santa home for the holidays this year – and that’s you and me.

Don’t laugh. Most of us throw our money sense out the window at Christmastime. We don’t want to worry anymore. We’ve worried about the nickels and dimes all year. ‘T’is the season to let your hair down my brothers and sisters.”

It truly is the buy now pay later season. “Don’t bug me about the details right now. I’ll get back to you.”

We want to give – to our friends and family all kinds of things throughout the year, but we hold back. We accept our limitations. We proceed with caution. We try to balance our budgets. For many of us, Christmas gives us a vacation from the worry, the penny pinching, the Scrooge like frugality that everybody really hates. And you know what? This is a great definition of the Christmas Spirit.

That said; hold the phone – shut the front door. The commercial message bombarding the airwaves about giving and buying things is not the same as giving from the heart – what we can afford and the most valuable gift of all, our time. We enjoy the time granted by employers, governments and society at Christmas – to see and be with our friends and family. This is the true spirit, the magical quality to Christmas that does not occur at any other time throughout the year.

Santa Claus with a sleigh full of endless gifts is a product of fiction. We believe in Santa because he makes us feel good. One of the reasons might be that Santa doesn’t have to worry about a budget. All the gifts just come from the charity of hard working Elves at the North Pole. What a wonderful thought?

The only downside – IT’S FICTION FOLKS. Santa Claus does not need a budget because he isn’t real.

This realization does not diminish the Christmas spirit in any way. What it means is that older children and adults understand that Santa isn’t real in the literal sense. He is a figurative representation. Santa is a symbol of giving freely without strings attached. This is something most of us want to believe in.

Maybe the best gift we can give ourselves and our families this year is a budget – a plan to avoid trouble, to lead us to prosperity, our children to post secondary education and the parents to early retirement.

But, it must be realistic and affordable. This is the tricky part. What do we really need? How much can we afford to spend?

The advice we all hear from the experts during this time is this. “Set down a budget for all the gifts. Remember that the children are the ones who expect gifts. The adults are a different story. They know that the gift-part of Christmas is for children, so, budget accordingly.”

-To Be Continued-