With so many travel insurance plans available on the market, how can you make sure you’re getting the best one for your needs?
These days, it’s no longer necessary to buy travel insurance from the tour agent, or an insurance agent. With just a few taps on your smartphone, you can compare and find the best premiums and coverage. However, you may put off by the large number of options available.
Here’s a step-by-step guide to choosing the right kind of travel insurance.
Step 1: Determine if Any Travellers Have Pre-existing Conditions
A pre-existing condition is an illness that you have already been diagnosed with, at some point in the past. Some examples include stroke, heart attack, or diabetes.
At the time of writing, only NTUC Income offers travel insurance that covers these pre-existing conditions. Other insurers won’t cover anything that arises from these conditions.
Step 2: Look Up the Medical Evacuation Coverage, and Repatriation
The most important form of coverage is medical evacuation, and repatriation. Avoid relying on travel insurance that does not provide for both of these, or which have low payouts for them.
Medical evacuation covers the cost of bringing you to the nearest medical facility, wherever you may be. The cost can be extremely high, if an air evacuation is needed. For example, if you get ill on a cruise ship, or while halfway up a mountain side, a helicopter may be needed to evacuate you. Typically, the cost of such an evacuation is around S$33,000 in North America, and double that in Europe.
Medical evacuation also covers the act of transporting you back home to Singapore for continued treatment or rehabilitation. This is typically performed after administering emergency care.
Another term most travellers are not familiar with is repatriation. Strictly speaking, repatriation refers to transporting your mortal remains back to Singapore, so that proper last rites may be administered.
Logically, your travel insurance plan should cover both emergency medical evacuation and repatriation. However, many forms of free travel insurance only cover repatriation. These policies are a false savings, as the potential costs outweigh the limited benefits.
Step 3: Determine if the Coverage for Your Belongings is Sufficient
A common mistake is to look at the total payout available for lost or damaged items (e.g. coverage of up to S$1 million). Actually, the total possible payout is not the figure you should focus on.
Instead, focus on the breakdown of coverage for different items. For example, a policy may have up to $1 million in coverage; but the maximum pay out for a laptop is only S$500.
In particular, note that some policies have no payout for lost cash, whereas more premium policies may pay up to S$250 for lost cash. This is important if you intend to carry cash often while shopping (i.e. you will know not to bring more than S$250 with you at any time).
You also need to consider the coverage for things you’re buying abroad. For example, if there is no coverage for lost jewellery, it may be a better idea to have any jewellery shipped home, instead of placed inside your luggage.
Vary the items your carry based on your policy (or vice versa; vary the policy to match what you carry).
Step 4: Check for Ministry of Foreign Affairs (MFA) Travel Notices
Check if the place you’re visiting is on the MFA travel notice list. If the MFA has advised against travelling to a particular place, your travel insurance is usually invalid if you go.
Sometimes, a travel notice can be put up after you’ve bought your travel insurance. In such a situation, you may make a claim for a cancelled trip. This is one of the key reasons to buy your travel insurance early.
Step 5: Check if Your Activities are on the Exclusion List
Check what’s excluded from coverage. Some travel insurance policies don’t cover activities like mountain climbing (beyond a given height), bungee jumping, diving (beyond a given depth), etc.
In most cases, you can purchase additional riders that will include coverage for these activities. It may cost a little more, but it’s always worth it – if you intend to take part in these sports, they would be the main reason you want travel insurance in the first place.
Step 6: Google for Feedback/Reviews
Once you’ve shortlisted a few plans, don’t forget to Google for reviews or feedback.
Insurers with a poor claims process will usually show up fast – customers tend to be quite vocal, in complaining about slow or unfairly rejected claims. This is what you’re looking for, when you Google the name of the policy and the insurer.
Give a wide berth to any policies that attract multiple complaints.
Step 7: Compare the Premiums
Once you’ve identified the policies that meet your needs, choosing one comes down to cost-effectiveness. Two policies (or more) can offer the same coverage and payout, and yet offer very different premiums.
Also, insurers can (and do) hold sales and promotions, which means you can get a premium plan at affordable prices.
To help you get the most value out of your plan, be sure to compare before you buy.
Step 8: As a Final Afterthought, Compare the Perks on Offer
Never pick any insurance policy based on the perks or free gifts alone. Factors such as coverage, payout, and premiums should always take precedence. After you’ve shortlisted the right policies based on these, only then should you start comparing the perks.
Such perks offered may be free lounge access to the airport, free luggage carriers, bonus luggage weight, and others. When you’re struggling to choose between two equally appropriate policies, look for additional perks. Pick the one that suits your needs best.
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.