Mary Paul spent years paying for credit card refund insurance that she didn’t want

Retired university professor Mary Paul warns people to check their credit card statements if they’re unknowingly paying for low-cost credit card insurance that has limited coverage.

Liability insurance is a type of insurance that should be reimbursed if the cardholder is sick, seriously injured, or fired, but banks are no longer selling it after being criticized by the Financial Markets Authority Te Mana Tātai Hokohoko (FMA), and missing scandals abroad.

But when Kiwibank, ASB, Westpac, Bank of New Zealand and ANZ stopped selling, they did not remove the existing policies, and at the end of last year, it is estimated that about 200,000 people still have policies.

Paul found out he was one of them when he inquired about the interest rate on his Kiwibank credit card earlier this year.

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It turns out an Aucklander was sold credit card insurance in 2006 over a three-minute, 30-second call from a Kiwibank salesperson.

He has paid $1000 since then, and his payments are only made in the months he has not paid in full.

He fooled himself because he didn’t realize that he had been fired before, but he quickly realized that in 2006 he was sold for less money than he was.

“I was in a job that I would never lose. I had a house. I had life insurance. I don’t see any other way to say it,” he said.

Data collected by the Reserve Bank and the Financial Markets Authority showed the most expensive insurance sold by banks and insurers. First published in 2020.

He got a recording of the sales call, and never heard the salesman’s attempts to see if the cover had any value for him.

In 2019, Liam Mason, director of regulation at the FMA at the time, said there were “very few circumstances” in which credit card refund insurance should be mandatory for consumers.

When Paul turned 65 in 2017, Kiwibank’s policy meant he could no longer claim permanent or temporary disability, redundancy, unemployment, or serious illness.

That left nothing to say in the case of death, or terminal illness, and he still had life insurance, so he didn’t need it.

He complained, first to Kiwibank, then to Cigna, the insurer behind Kiwibank’s policies. Both said they are looking into her complaint, but Cigna has already refunded her $100 as a “goodwill”.

A Kiwibank spokeswoman said the bank was “aware of these complaints and is working with Cigna”.

Looking back, Paul thinks he might have been sold an insurance policy he didn’t want in 2006. He was recently divorced, and he was sick.

A Kiwibank spokesperson says the bank is working through Mary Paul's complaint with Cigna.

to be given

A Kiwibank spokesperson says the bank is working through Mary Paul’s complaint with Cigna.

As he listened to the commercials, he looked tired, confused and desperate for the conversation to end.

Research published recently from the FMA shows that many people, including highly educated people like Paulo, face a time when they have “vulnerable attitudes” that lead them to be used by financial companies, or fraudsters.

He said he did not remember the call.

Cigna said it contacts all credit card customers every year, but Paul said a phone call to ask if the coverage fits their needs would be better than a letter.

Cigna sent Paul letters that included the 2019 and 2021 policies, which Paul said he did not remember receiving.

The December 2021 letter said it was important for him to reassess his insurance needs, and that since he was over 65, his chances of a claim were slim.

Concerns about mortgage insurance have been around since 2013, but it wasn’t until March last year that Kiwibank became the last major bank to end the sale.

When the FMA investigated, it found problems.

It took a case to the High Court against ANZ, which was eventually fined $280,000 for overcharging people too old to report, and charging other customers double the same amount.

Cigna, which bought ANZ’s insurance business, had to pay $180,000 and promised to make better practices to avoid failing to treat customers fairly.