Junk Mail Confidential
Our reporter is on a long-term mission to find one useful direct-mail offer--just one. This month's dispatch: credit insurance.
(MONEY Magazine) – • THE COME-ON What if you die? Who will pay your credit-card bill?
• WHO Capital One
• WHAT IT IS If you lose your job involuntarily or can't work due to a temporary disability, this policy covers up to 12 months of minimum payments. It also pays in the event of death (the full balance) or permanent disability (up to $10,000).
• COST Up to 89¢ per $100 of balance
• THE REALITY Total rip-off. The average American household carries about $8,000 in card debt. Let's assume your monthly minimum payment on that total is $240. For this service, you'd pay up to $71.20 a month--that's a full 30% extra for an insurance payout you'll probably never need and that might be covered by insurance you already have, says David Sinow, a finance professor at the University of Illinois. As for death, your regular life insurance payout should cover your credit-card debt.
• THE ALTERNATIVE Regular disability insurance, which you should already have anyway. You can probably insure 2/3 of your income for just a bit more than the cost of this policy. Or use that $71.20 a month to pay down your credit-card balance.