Before making a claim, understand these 4 hidden conditions, otherwise you may suffer a big loss in the pursuit of profit.

Whenever a bank or financial institution issues you a credit card, along with the rewards points, cashback and lounge access, the brochure says in big letters—“Complimentary Air Accident Cover up to ₹1 Crore” or “Personal Accident Insurance of ₹5 Lakh”. Most customers ignore it as just a marketing gimmick or assume that just by having the card in their wallet, they and their families are completely safe from every financial and physical risk. The reality is that many types of insurance covers are actually available free of cost (inbuilt/complimentary) with credit cards, but there are such stringent technical rules and hidden clauses behind them that in case of even the slightest mistake, the insurance company rejects the claim in one go. If these rules are not understood in time, then at the time of emergency the victim’s family has to face huge losses, both financial and mental.

Banks offer insurance protection in different categories depending on the variant of their card (Classic, Gold, Platinum, Signature or Infinite):

• Personal Accidental Death Cover: The nominee gets a fixed sum assured in case the cardholder dies or becomes permanently disabled due to road, rail or any other accident.

• Air Accident Cover: This cover is available in case of death of the cardholder in a plane accident, the amount of which can range from ₹ 50 lakh to ₹ 1 crore or more on premium cards.

• Zero Lost Card Liability and Fraud Protection: If the card is lost, stolen or there is unauthorized transaction through online cloning, the insurance company compensates the loss after notifying the bank.

• Purchase Protection and Warranty Extension: Electronic goods, mobiles or valuables purchased with a credit card are covered against theft or accidental breakage for 90 to 180 days from the date of purchase.

• International Travel Insurance: Expenses incurred due to baggage loss, passport theft, flight delay or sudden medical emergency while traveling abroad are reimbursed.

Most of the disputes in the name of free insurance are due to the following conditions, which banks often write in fine print:

1. Active Card Rule (The 30/90 Days Rule): This is the most important condition. Insurance companies accept claims only on cards that have been ‘active’ within 30 to 90 days immediately preceding the date of the incident. If your card is lying locked in the drawer for 3 months and no transaction (swipe or online payment) has taken place on it, then in case of an accident, the nominee will not get even a penny.

2. Mandatory for ticket booking with the same card: The mandatory condition for availing air accident cover is that the air ticket has been booked on the same specific credit card. If you have booked the ticket through cash, net banking or any other card, then the premium credit card kept in your pocket will prove to be of zero value at the time of an air accident.

3. Strict reporting window: In case of credit card theft or fraudulent transaction, most banks make it mandatory to lodge a report with customer care or on the app within 24 to 72 hours. There is no benefit of zero liability on late information and the entire loss has to be borne by the customer.

4. Not covered on natural death or illness: This is not Life Insurance/Term Plan. Accidental cover on credit card is not applicable in case of illness, heart failure, age related problems or suicide.

If any untoward incident happens to a cardholder, his nominee or next of kin must follow a streamlined process to get the insured amount:

• Quick Bank Information: As soon as you get information about the incident, first of all lodge a written claim at the nodal branch or helpline of the card issuing bank.

• Gather required documents:

  
  

  • Certified copy of Police FIR and Panchnama.

  • Hospital discharge summary, medical records and death certificate.

  • Post-Mortem Report and Viscera Report (if applicable).

  • In case of air accident, original boarding pass, airline ticket and monthly credit card statement showing ticket booking transactions.

  • Nominee’s KYC (Aadhaar, PAN, Canceled Cheque) and legal proof of relationship with the cardholder.

• Filling the Claim Form: Fill the claim form completely and submit it along with all the documents to the General Insurance Partner authorized by the Bank within 30 to 60 days.

Financial advisors clearly state that the insurance provided with credit cards is only an add-on benefit and should never be considered a substitute for a dedicated ‘term insurance’ or ‘health insurance’. It is wise to have a separate standalone term plan for your family’s financial security. To truly avail the benefits of credit card insurance, make small bill payments from your card from time to time so that the card is always in ‘active status’, get the nominee name on your card duly updated in the bank records, and keep your family members clearly informed about which credit cards you have and what insurance facilities are associated with them.