A perfectly-planned holiday can be ruined by an unexpected event. The uninvited and often unpleasant event could be either a minor delay in arrival of baggage or a flight. Or it could be a serious health scare or the horror of losing one's passport. Sure, you have no control over these events. But you can limit the damage caused by them by buying travel insurance.
Insurance penetration, however, is around 20% of all international travellers, points out a study conducted by Tata AIG General Insurance. "This is only because Schengen visas mandatorily require the traveller to have a travel insurance policy," the study states. But even if you are travelling to a non-Schengen country, it is advisable to opt for travel insurance because of exorbitant cost of healthcare abroad.
"The cost of medical treatment is high abroad and insurance policies assure that such services are made available to the travellers at the price they pay for travel insurance, which is extremely low," says Rajiv Duggal managing director, Kuoni India.
"For instance, if you cut your finger, the basic check up would cost you anywhere between $500-1,000 ( Rs 26,000-50,000). This possibility of incurring such a huge expense can be covered at a daily insurance rate of 68," says Noel Swain, EVP, supplier relations, Cleartrip. "More so, the outbound travellers are mostly in the age group of 45-60 years. In this age bracket, travel insurance is highly recommended," says Rajiv Duggal.
Most travel insurance plans are standardised vanilla plans covering accident and sickness, baggage delay/loss, passport loss, personal liability etc. But there are certain differentiating factors you should consider before buying a travel cover.
Claim settlement ratio of insurer
You buy travel insurance to make sure that the insurance cover would help you when you need medical attention abroad. That is why it is very important to make sure that your insurance company is not infamous for rejecting claims on flimsy reasons. "A traveller has to check the claims settlement record of the company which are usually available on the company's website or policy schedule," says Suresh Sugathan, head-health & travel insurance, Bajaj Allianz General Insurance. If this data is not available on the website, check this data with top 3-4 insurance companies before finalising your policy.
Several insurance companies have tie-ups with foreign insurers. But make sure that the insurance company has sufficient direct or indirect presence in the destination country to service your claims. "The insurer, from whom the plan is being purchased, should be a recognised player and should be valid abroad. Also evaluate the network of tie-ups with the facilitators, agencies and service providers abroad for handling any emergency," says Suresh Sugathan.
Clause on pre-existing diseases
Very few insurers cover health complications that arise out of pre-existing diseases in travel insurance. "Pre existing ailments are usually not covered in travel insurance and it is imperative that the policyholders understand this. In case of any health problem, while travelling, they should be prepared to pay out of pocket for pre-existing conditions," says Arun Balakrishnan, CEO, BerkshireInsurance.com.
However, Bajaj Allianz offers a policy which covers pre-existing medical conditions. They have capped the amount at $300, $500 and $1000, respectively, for classic, premium and privileged. Similarly, ICICI Lombard covers pre-existing conditions till the patient's condition becomes stable.
"For example, if a customer who is a heart patient, declares his/her heart condition before taking the policy, the travel policy covers him in the event of another heart attack. Once the condition becomes stable, (when he/she is shifted from the ICU to general/normal ward and is out of danger) from that point onwards, the expenses of further treatment have to be borne by the customers," says Sanjay Datta, head undertaking and claims, ICICI Lombard.
Buy a wholistic plan
There is no dispute over the fact that health insurance is a principal component of travel covers. "The most important cover in a travel policy being the medical cover, it is important to check if the sum insured is commensurate with the premium and also check the list of exclusions in the policy," says Arun Balakrishnan.
But ideally you should look at a travel policy which also looks beyond a health cover. "For instance, loss of baggage or baggage delay is very common as airlines do misplace or lose baggage while flying from one destination to another," says Ravi Menon, head - forex, Cox & Kings.
The passenger is terribly inconvenienced, so it is important to include non-health issues. "Trip cancellation is another cover which is important and not related to health and has financial implications. In our opinion, a passenger should avail a wholistic cover while travelling," says Ravi Menon.
The Cost factor
If you are planning a trip for three to six months to the US or Canada, it is best you opt for long-term travel policies which are even available for up to 365 days. But if you are going on an international holiday for a week or a fortnight, there are insurance plans, which are offered and can be renewed even for one day.