Card users shocked by insurance fine print

The Consumer Foundation (消基會) yesterday reminded the public to carefully read the fine print in their credit-card agreements to make sure they are eligible for automatic flight-insurance coverage.

"Currently, although major credit-card issuers claim paying for tickets on credit includes life insurance coverage for the flight, there are a lot of limitations most people are not aware of," said Mark Chang (張智剛), secretary general of the foundation.

For example, only the card holder, his or her spouse and their juvenile offspring are covered, while other relatives are excluded.

Exact coverage and age requirements vary from company to company.

This issue has come under the scrutiny of the local media after the crash of China Airlines flight 611 into the Taiwan Strait in late May, which killed more than 200 people.

One purchaser of three seats on that flight -- an ABN AMRO Bank (荷蘭銀行) credit-card holder surnamed Lin -- used his card to buy tickets for his father, wife and 14-year-old son. After the accident, Lin learned that AMRO Bank would -- according to their card-insurance agreement -- only pay compensation for his wife and son.

He accused the bank of misleading card holders by stating in their promotional literature that "if you use your card to pay for air travel, your family will enjoy insurance coverage."

According to Lin, there was no "reminder" to read the fine print, and he admitted he just forgot to do so.

With 25 million credit cards in circulation in Taiwan, competition is tough and card issuers use insurance and other freebies to lure customers to sign up for -- and swipe -- their cards.

Credit-card operators are able to offer group flight insurance to their users and pay, on average, compensation of approximately NT$10 million for each air traffic fatality.

"With all the restrictions on credit card insurance, using your credit cards to pay tickets and get free flight insurance is a marketing tool rather than `real' insurance," said Henry Wang (王正偉), deputy director at National Cheng-Chi University's Insurance Education and Research Center.

The academic said companies should work harder to make sure consumers know what their rights are.

"Credit card companies have an obligation to explain the fine print and make sure consumers understand," Wang stressed.

While Lin will receive NT$15 million in compensation from card issuer ABN AMRO Bank for the loss of his wife, he was shocked to learn that he would get only NT$1 million's compensation for the loss of his son.

"Does that mean the boy's life is only worth of NT$1 million?"

NT$1 million is the maximum compensation allowed for an adolescent under the age of 14, according to Taiwan's insurance law. The law seeks to protect Taiwan youth from parents who seek to harm their offspring and then try to collect the insurance pay-out.