Credit Card Travel Insurance vs Travel Insurance: What’s the Difference?

Alevin Chan

Alevin Chan

Last updated 17 October, 2022

Travel-Insurance-2022Selected credit cards offer complimentary travel insurance. But how do these free plans stack up against paid travel insurance plans?

Yes, free travel insurance is totally a thing. All you need is the right credit card.

There are multiple credit cards in Singapore that offer complimentary travel insurance as a perk, which is not surprising, given our national obsession with taking holidays overseas.

This love for travel has not gone unnoticed among insurers operating in Singapore, with travel insurance being one of the most readily available travel insurance plans here. Just hop online, and you can purchase a plan for your trip in minutes.

Credit card complimentary travel insurance and paid travel insurance plans can both be viable choices for travellers, especially since both offer COVID-19 coverage by default these days.

However, beyond the surface similarities, these plans have important differences that affect how they work and the coverage they provide.

Let’s dive in for a closer look.

At-a-glance: Credit card travel insurance vs paid travel insurance

Credit card travel insurance

Paid travel insurance

Complimentary when you charge the trip to the card

Requires one-time premium payment

Available only on selected credit cards

Offered by multiple insurance providers

Coverage restricted to certain parties only

No restriction on how many people you can cover

Benefits not customisable

Benefits customisable

Cost

The biggest difference between credit card travel insurance and paid travel insurance is, of course, the cost. One is free, and the other is not.

This may not be such a big deal, as travel insurance plans are relatively affordable, especially if you limit your trip to nearby regions.

However, for longer holidays, faraway locations and selected countries such as the U.S. the cost of travel insurance can go up quite a bit. This is compounded when the entire family is coming along.

In these scenarios, prudent use of your complimentary credit card travel insurance can help lower the cost of insuring your family for travel.

For example, you could insure yourself against personal accidents using your credit card travel insurance, and tap on your family’s paid travel insurance plan to cover loss of personal items and baggage.

Setting things up this way is an advanced manoeuvre, so be sure to seek qualified advice if you’re not confident of doing it yourself.

Availability

Paid travel insurance plans are widely available, and a simple search will throw up several options from different insurance providers, large and small, leaving travellers spoilt for choice.

In contrast, credit card complimentary travel insurance plans are only offered to holders of credit cards, and even then, not every credit card is eligible – although you can still find a fairly wide selection.

In any case, signing up for a credit card in order to qualify for free travel insurance is a relatively simple thing – entry-level cards such as the UOB PRVI Miles card and the DBS Altitude card (just to name two) have an annual income requirement of just S$30,000.

Restrictions

Here’s an important thing to note about your credit card travel plan – most only covers the principal cardholder and in some cases, the spouse.

This means that the travel insurance benefits offered are only for you and no one else, even if they are immediate members of your family that are travelling with you. As such, it is best for all adults joining the trip to have their own credit card travel insurance.

If there are those joining the trip that do not have credit card travel insurance – such as children, or elderly family members, that slacker cousin that refuses to grow up – a separate travel insurance plan for them will need to be purchased.

Another restriction to consider is that credit card travel insurance only covers the portion of the trip charged to your card.

This means that if you paid for your air tickets using your credit card, but not your hotel rooms, you may only be able to claim for flight delays, but not hotel cancellations.

Thus, for complete coverage, you’ll need to charge everything to your card.

Customisability

Credit card travel insurance plans are offered on an “as is” basis – in other words, you can’t ask for add-ons or customise your plan in any way. (Well, you can contact your card issuer with your request, but you’ll just  be directed to purchase a paid plan).

Therefore, it is crucial that you scrutinise the complimentary travel plan offered on your credit card to see if it has the coverage and benefits you need. If there are critical benefits lacking, you should not rely solely on your credit card travel insurance plan.

On the other hand, paid travel insurance policies come with a degree of customisabilty, some more than others. You will commonly find a few tiers for you to choose from, along with a selection of add-ons to further personalise your plan.

Of course, higher-tier plans with larger sums assured will cost more, while adding optional add-ons to your plan will also increase your premiums.

Conclusion: Is free good enough?

Although both are aimed at providing coverage and protection to travellers, credit card travel insurance and paid travel insurance are markedly different – and not just because one comes free and the other does not.

It all boils down to this: Is your free credit card travel insurance plan good enough for your trip, especially since COVID-19 benefits are bundled in by default these days? This leaves greater discretion as to whether you need to purchase a separate travel plan for, say, a casual weekend getaway to Bangkok.

However, while your free credit card travel insurance plan might suffice for such a trip, a longer holiday with more members of the family tagging along likely warrants a paid travel plan that can properly cover all parties going on the trip.

Even when you have a more robust travel plan, your credit card travel insurance can still be used to fill in or boost certain coverage areas (such as personal accident, medical benefits, etc).

However, note that you won’t be able to make multiple claims on the same event (such as, for instance, claiming against both plans for the loss of your laptop).

Above all, remember this: It’s always better to have insurance and not need it instead of needing insurance but not having it.

An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.