Consumer credit insurance

When you apply for a personal loan, mortgage or credit card, you may be offered consumer credit insurance. It offers poor value for money and you don't have to buy it.

How consumer credit insurance works

Consumer credit insurance (CCI) is an optional insurance sold with personal loans, credit cards and some mortgages. It is meant to help you if:

• you can't repay your debt because you lose your job, you are sick or injured, or you die.
• your credit card is stolen.
• goods you buy using your credit card or personal loan are damaged, lost or stolen.

The product provider can tell you about CCI when you apply for credit or a loan. But they must wait until four days after your credit or loan is approved before selling it to you. This gives you time to consider if you need it. You don’t have to buy it!

If they don't wait before selling it to you, you have the right to cancel the insurance and get a full refund.

Consumer credit insurance is poor value

Many people get little or no benefit from CCI. A 2019 ASIC review of CCI showed that:

• Only 11 cents was paid for every $1 paid in premiums for CCI sold with credit cards.
• Only 19 cents was paid for every $1 paid in premiums across all CCI products.

Even when a claim is paid, the payout may be less than you expect. Some policies only pay a percentage of the outstanding balance. Others stop paying after a set time.

What to check before you buy

check_box What’s the total cost – ask for the full cost, not just the monthly amount.

check_box What’s the benefit amount - consider whether the benefit matches the size of your debt. In some cases you're only paid a percentage of the outstanding balance and payments by instalment may stop after a limited time.

check_box How are premiums charged - if premiums are added to your loan, you’ll pay interest on them.

check_box What does the policy cover and exclude – read the policy document carefully to make sure you know what you’re paying for.

check_box Are there any conditions on making claims – for example you may have to work a set number of hours in order to meet the definition of 'employed'. There may also be waiting periods that apply before you can make a claim.

Making a claim on consumer credit insurance

Submit a claim as soon as possible

It's important to lodge a claim as soon as possible after the insured event. If you wait, there may be a gap between what your policy pays and the debt you owe.

Visit the National Debt Helpline website for steps to take to claim on consumer credit insurance.

Tell your insurer if you're in financial difficulty

If you urgently need payment, you can ask your insurer to:

• fast track their assessment of your claim.
• give you an advance payment within five business days of when you demonstrate your eligibility.

Ask your lender about a financial hardship assistance. Ask them to postpone recovery action while they process your consumer credit insurance claim.

How to complain about consumer credit insurance

The first step is to contact the insurer’s internal dispute resolution department if:

• you think the insurance was sold to you unfairly
• the provider did not wait four days after your loan or credit was approved before selling you this insurance, or
• the insurer rejects your claim.

If you can't reach an agreement, you can contact the Australian Financial Complaints Authority (AFCA) to make a complaint and get free, independent dispute resolution. AFCA received 7,880 add-on insurance complaints (of which CCI is a part) in 2024/25.

Learn more about complaining to AFCA about consumer credit insurance.

Learn more about other types of insurance you may be able to use instead.