In a reversal of traditional trends, Americans over 50 are currently carrying higher levels of credit card debt than their younger counterparts—an average of $8,278 compared to $6,258—according to 2012 figures from U.S. think tank, Demos.

Medical purchases are prominent features on the monthly statements of over half of these adults, many of whom have taken on additional debt and removed money from their retirement fund to help out other family members.

Paying off the full balance on a card each month is one of the key credit card strategies for retirees. Consequently, products protecting against unforeseen events that could prevent card holders from paying off this debt have grown in popularity.

A payment protection plan is one way credit card companies offer consumers peace of mind.

Details vary from policy to policy, but most offer to temporary suspend an individual's monthly payments in the event of unexpected job loss, death or disability. Some may also cancel an outstanding balance (up to a certain amount) if the cardholder passes away.

In exchange for this safeguard, cardholders pay a fee—typically a percentage of their monthly bill.

Pros and cons of payment protection plans

The goal of a payment protection plan, according to financial attorney and debt specialist, Leslie Tayne, is to protect an individual's credit score in the event they are unable to pay their bills. Such products may be beneficial for aging adults, says Tayne, as they are more likely to face situations in which illness or injury prevents them from being able to pay their bills.

Unfortunately, these policies don't offer much help to those who rely on Social Security or government pensions for the bulk of their income. An often overlooked caveat, payment protection only extends to certain situations, such as involuntary unemployment—not loss of government benefits.

Some states have even banned payment protection plans because they are considered a form of life insurance. Tennessee, Alaska, Washington, Montana, Nevada, Wisconsin, Oregon, Rhode Island and Iowa are a few such states.

This hasn't stopped credit card companies from signing people in these areas up for such plans, only to deny their claims later on.

Indeed, there has been such a distinct lack of reliable information about the benefits and how cardholders can access them in the event of a crisis, that a rash of lawsuits have been filed against payment protection plans offered by credit issuers.

A 2012 claim made by the state of Hawaii against several behemoth banking institutions states that the average payment protection plan is, "so confusing as to when coverage is triggered, so restricted in terms of the benefits it provides to subscribers, and processing of claims is made so difficult by Defendants, that it is essentially worthless."

Banks have been forced to shell out millions in compensation; leading prominent players, Chase, Bank of America, Citibank, Discover, Capital One and American Express to cancel their payment protection programs, according to Alex Matajanec, co-founder of

Consider alternate options

Despite these issues, some companies continue to offer payment protection products.

"There is potential for such plans to save people plenty of money," says Matajanec. But he adds that older consumers should analyze and compare the financial realities of payment protection policies to other alternatives for safeguarding their credit.

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Say a credit issuer charges 90 cents for every $100 on your monthly balance for payment protection. If you carry a $3,000 credit card balance each month, you would pay about $324 per year for that plan.

A little over $300 may seem a small price to pay, but a 2009 report by the Government Accountability Office found that most people don't get what they pay for such plans. Individuals who purchased debt protection policies received a mere 21 cents for every dollar they spent.

Given that rate, Matajanec says you may be better off putting a little money each month into an emergency savings fund.

Another factor to keep in mind is the value of your credit score.

Tayne points out that a rock-solid credit score, while undoubtedly useful when applying for loans and jobs, is not an essential for all adults who are at or near retirement age.

As with all financial decisions, the choice to sign up for a payment protection program is one that should be carefully considered on an individual basis.