What is travel insurance and is it worth the cost? Our guide examines what travel insurance does and whether or not it is a necessary purchase for your next trip.
Table of Contents
- Defining Travel Insurance
- Why You May Need Travel Insurance
- Travel Insurance Policy Structure
- How to Pick the Right Travel Insurance
Defining Travel Insurance
Travel insurance is a form of insurance that serves to protect you against losses incurred during your travels, and covers everything from baggage loss to injury. It originated in the 19th century for wealthy citizens, and it initially covered theft and unforeseen circumstances. In the late 20th century, due to the increased popularity of tourism, travel insurance experienced drastic changes by incorporating annual plans, medical coverage, and airline-related expenses such as trip cancellation and flight delay coverage. Today, it covers all of this and more, with some insurers even covering sports equipment and terrorism events.
You can choose your travel insurance plan based on duration of your trip and what region of the world you are going to. Plans are usually sold by an independent insurer, your credit card company or the airline/cruise carrier. You can expect to pay between S$37 to S$63 for a one-week trip, S$52 to S$94 for a two week trip and S$280 to S$382 for an annual trip.
When You May Need Travel Insurance
Travel insurance is an optional purchase and if you really don't think it is worth your money, you are not obligated to purchase it. However, there are several reasons why you may benefit from purchasing a plan. First, travel insurance protects you against unexpected medical costs while you are abroad. This makes it a great hedge against costly medical expenses if you tend to get sick easily or if you end up in an accident, because international medical costs can get very expensive and you don't have to worry about finding a doctor that will accept your health insurance.
Secondly, travel insurance can protect you from out of pocket costs associated with your belongings. If you travel with expensive clothing or electronics, travel insurance can recover some of the losses if the airline delays, loses or damages your luggage. Third, travel insurance can protect you in the event your trip is delayed, cancelled or missed due to natural disasters or other unforeseeable events. This can be especially helpful if you are planning a multi-tiered trip where you have multiple connections and a timed itinerary, or a trip to a country that experiences extreme weather like tropical storms or winter blizzards.
Travel Insurance Policy Structure
Travel insurance is divided into several sections: personal accident, medical expenses, travel inconveniences and personal belongings. Personal accident coverage includes accidental death/permanent disablement, compassionate visit benefits (for when you need a family member to fly out when you are in the hospital), and sometimes a child grant benefit in the event of the parents' death. Medical expenses include medical evacuation and repatriation, emergency mobile phone charges. Travel inconvenience includes baggage delay or loss, trip cancellation, missed connections, trip curtailment and alternative travel arrangements. Personal belongings usually covers your electronics, documents and items you are traveling with such as clothes and shoes. You can also choose add-ons for your policy including additional medical coverage, or for miscellaneous things like pet care or car rental coverage.
[table align="left right" |Industry Average (S$) _ 1-Week Global Trip|63 _ Trip Inconvenience|18,006 _ Medical Expenses|609,218 _ Personal Accident|260,048 _ Trip Cancellation|10,185
You can purchase your policy based on the duration of your trip and your destination. Insurers offer plans for trips as short as a couple of days to annual plans that cover frequent travellers for a whole year. Prices depend on the location of your trip and how long you are going for, with annual plans to places outside of Asian countries being the most expensive. Additional price changes come from the amount of people traveling with you, as you can insure only yourself or your entire family.
Many travel insurance plans do not cover injuries resulting from adventurous activities like skydiving, mountain climbing, skiing/snowboarding and other high-risk sports, though there are also many that do provide protection against those events. You will also not be covered for medical expenses if you are travelling against the advice of your doctor or if your trip is for a medical purpose, including pregnancy-related reasons. Insurers will also deny coverage if you travel to war-torn countries or destinations that have been declared unsafe by news outlets and governments. Like all other insurance policies, your payout will depend on the deemed severity and legitimacy of the claim. To make sure you are wholly protected, you should take care to read the company's policy wording before purchasing a policy.
How to Pick the Right Travel Insurance
If you decide that travel insurance is worth getting for your next trip, the best plan you will get will be one based on your budget and itinerary. For instance, if you have many excursions planned, you can opt for a travel inconvenience-heavy plan; if you are carrying expensive gifts to friends and relatives, you can opt for a plan with a generous personal belongings policy. Since you may be spending a lot of money on your trip, it is reasonable that you may not want to add more costs. But, many insurance plans are actually quite affordable and still have great value. If you need more help in comparing all of the policies on the market, our guides can provide you with more information on how to find the best travel insurance for your needs.