You've probably received the phone call that says that if you lose your job, your payments will be made for you by the plan, protecting your credit. And you can get a free shredder or gift card, and you can cancel in thirty days with your money back. Even if you don't want the plan, you should sign up and get the free gift.

And they are betting you will forget to cancel.

Payment protection plans are pitched that they will make your credit card payments for you if you are hospitalized, lose your job or suffer a financial hardship. This sounds like a good thing to have in place. But it isn't.

There are many different types of credit card insurance. Including:

Credit disability -- pays your minimum monthly if you become disabled. Credit unemployment -- pays your minimum monthly if you are fired or laid off. Credit property -- pays for items purchased with the card in the event that they are broken, lost or stolen. (Some cards offer this for no additional charge.) Credit life -- pays if you pass away.Most people don't need a credit card insurance plan. The main reason is that it costs you money. For example, the plan might cost you 75 cents per $100 balance you have. If your balance is $3,000, you will be charged $22 each month for your protection plan. Your yearly premium is $264, which equals an APR increase of 9% on the card. It is better to invest the money into your savings account each month and earn a little interest on it.

You have to read the fine print in the protection plan. Most credit card companies will not let you use the credit card when the insurance is making the minimum payment for you. If you are in a financial emergency, you might need to use your credit card.

In most cases, you will really have to work to prove your claim. If you are fired, you must document that your unemployment is involuntary. And if you had a contract with your employer that simply wasn't renewed, you are out of luck. If you become hospitalized, you must show that your illness is not a pre-existing condition.

When you pass away, your estate will need to pay your credit card bills. If the estate can't cover the bills, your bills will be charged off by the credit card company. Unless you have a joint account, that is the end of it. The credit card company cannot go after your family for your debts. There is no need for credit life insurance. You may argue that you carry a large amount on a joint account. However, remember that the amount you pay each month is set by how much you owe. Use the money towards a small insurance policy that can be used for all needs after your passing.

Before you agree to any purchases to your credit card, make sure you know exactly what you are purchasing. Yes, it may sound great now, but if you never collect, you just wasted your money. Take the time to read the fine print first.