..a volcano decides to spew out ash that disrupts your travel plans and leave you stranded at an airport, or you need medical treatment in another country where health care costs are simply prohibitive, or you end up losing your baggage and are left with nothing but your travel documents or in fact say you end up losing your travel documents..the list is endless.
A trip overseas is not as uncommon as it was, maybe, a decade or two ago. Whether its ongoing and regular business related visits or family holidays once in a year or two, the Indian international traveller has pretty much arrived. Most of us plan these visits to other countries fairly well – right from the flights we’d like to take, our stay arrangements, our itinerary and the associated best deals so as to ensure value for money. Perhaps, the only thing we let our travel agent take care of completely is our travel insurance policy, if at all we buy one. What is surprising really is our willingness to either not cover the innumerable risks associated with an overseas travel at all or not giving enough thought and consideration to the product we purchase.
The need for travel insurance is fairly straightforward. One just needs to consider the countless number of things that could go wrong on such journeys and then evaluate the minimal amount of premium that one needs to pay to eliminate or at least reduce the financial impact of any of these risks. Let’s look at what all your travel insurance policy should generally cover and what you need to keep in mind while choosing your product:
1. Medical Expenses: This allows for the insurance company to bear the costs of any medical expenses that you may need to incur for any immediate medical assistance you require on account of any illness contracted or injury sustained whilst on a trip overseas. The amount that will be compensated is limited to the Sum Assured of this cover which in turn is something you can choose at the time of purchasing the policy. Needless to say, higher the Sum Assured, higher is the premium. One needs to keep in mind, though, that this cover is not available for any medical treatment arising out of pre-existing illnesses or any such treatment that can be deferred till your return back to India. When comparing this feature between products, you may want to consider the following:
a. If there are any sub-limits per illness within the Sum Assured. Some products may have such sub-limits to restrict what will be paid out per illness i.e. even if you take a Sum Assured of, say, USD 200,000 and the sub-limit per illness is only USD 100,000 then the maximum that will be paid out to you in case of contracting one illness would only be USD 100,000. Products with no such sub-limits or higher amounts associated with these sub-limits may be better options.
b. Some products may have separate limits above a certain age; you may want to consider and compare these limits vis-a-vis the associated premium being charged
c. Products that offer cashless hospitalisation will be better for an overseas trip as compared to any that may offer only reimbursements.
d. You may want to choose a product that also allows for a transportation cost back to India, if absolutely essential from a medical viewpoint.
e. Any and all exclusions under each of these plans
2. Personal Accident: This cover provides for compensation in case of death or disability arising out of an accident whilst on a trip abroad. The amount that is paid out is again limited to the Sum Assured that you choose for this cover. Most companies have a table of benefits associated with this cover that provides details of the proportionate amount of Sum Assured that will be paid out depending upon the degree of disability.
3. Personal Liability: Under this benefit, the insurance company will cover any costs associated with a third party liability arising of an incident (during the policy duration and whilst on your trip overseas) that results in death, injury or damage to a third party person or to his/her property – limited to the Sum Assured associated with this benefit.
4. Loss/Delay of Baggage: You can purchase a cover against the risk of loss of baggage or even a delay of checked in baggage. The insurance company will compensate you for the market value of your checked in baggage in case of its complete and total loss subject to the Sum Assured limit. You may want to compare the limits associated with contents that require appropriate proof of ownership. In the case of a delay in transportation of checked in baggage, the insurance company will compensate you for your emergency purchase of clothing, toiletries and medication upto a maximum of the associated Sum Assured provided this delay is more than 12 hours from the actual arrival of your travel carrier (your airline or ship) and there is written proof of delay provided by such carrier.
5. Loss of Passport / Travel Documents: This benefit will cover the costs associated with obtaining a new passport or related travel documents up to a maximum of the Sum Assured associated with this benefit subject to reasonable care having being taken to prevent such a loss.
6. Trip Delay / Cancellation / Interruption: A coverage for this benefit ensures that the insurance company will compensate you for any trip cancellation, delays or interruptions caused due to numerous unforeseen reasons including but not limited to:
a. Unforeseen injury, illness or death of the insured or insured’s family member(s)
b. Cancellation of on account of weather conditions
c. A terrorist incident in the destination city listed on the insured’s itinerary within 30 days of the insured’s scheduled arrival; etc.
You may want to compare the circumstances under which the benefit is allowed and the specific exclusions of each product for this benefit coverage.
7. Home Insurance: Most products now also provide you with a Home Insurance to cover for any loss that you may incur due to any damage to your house on account of fire and allied perils as well as a loss related to burglary whilst you are away on your trip.
8. Other benefits: You may also want to compare products depending upon availability of other benefits such as ‘Missed connections’, ‘Financial Emergency Assistance’, ‘Hijack distress allowance’, ‘Hospital Cash’ etc.
Do bear in mind that products with features that you may not require at all will lead to you paying a higher premium for no extra benefit. On the other hand, restricting the benefits may reduce the premium but could turn out to be far costlier in case of occurrence of an event that is not covered.
While considering any or all of the above features and pricing for products available in the market, it would be worth your while to also compare the following:
1. What is the deductible excess against each of these risk covers i.e. what is the amount that you as the insured will have to pay towards a claim before the insurance company picks up the rest.
2. What are the specific exclusions under each risk category and the general exclusions for a given products.
3. If you are a frequent traveller, you may want to compare prices for a multi-trip product that provides you ongoing cover for each of your overseas trips during a one year period. These products, however, usually restrict coverage for the duration of each trip during the year to a specific number of days.
Having purchased a travel insurance policy, make sure you keep it handy during your visit abroad and most importantly have the local contact numbers for your destination city as provided by your insurance company for any assistance that you may require in respect of the policy.
Now that the ‘what ifs’ are taken care of, here’s once again… Bon Voyage!
(c) i-save.com 2010