8 Travel Insurance Mistakes All Travellers Should Avoid Making
Travel is one of my favourite activities. I went out of Singapore at least once a year. I am sure many of you do the same.
We took some risk for each trip we make. We know that too. Travel insurance helps us manage some of these risks.
Most of you have heard of travel insurance. But I am sure not everyone will have a good understanding of it. You might not know what its purpose is. You might be unaware of its limitations. Insurance – after all – is pretty boring.
To help you make an informed decision, we put together 8 top travel insurance mistakes. Without getting too technical, we hope that you will find these lessons useful for your trip.
1. Not Buying a Travel Insurance
The number 1 mistake is not buying a travel insurance.
You might be thinking:
“For all the trips that I have taken, there isn’t a time where something happens. I am a frequent traveller. I know how to protect myself. “
Yes. I know that. I also have this mindset before.
The sad fact about insurance is:
Only when the unfortunate events happen, then you will start to appreciate them.
Not only travel insurance. The above statement applies to all kinds of insurance.
When these events do happen, you will regret not buying insurance. Talk to people who have claimed insurance before. They will be able to testify that. (If you can’t find any, drop me an email. I will share my personal story.)
What are some other reasons why you think that travel insurance is not necessary?
Here are 2 common reasons:
- Health insurance could substitute travel insurance
- You are rich, and therefore do not need an insurance
Health Insurance could substitute Travel Insurance
There are overlaps between health and travel insurance coverages.
But travel insurance also provides coverage that health insurance don’t.
For example, imagine you fall sick or injure yourself during your vacation. Travel insurance pays for your doctor wherever you are.
Also, it is not all about you. Travel insurance covers interrupted or cancelled trip due to death and illness of an immediate family member.
You are rich, and therefore do not need an insurance
Rich people do not need insurance. Spending 5 figures on medical evacuation barely make a dent in their net worth.
But this does not mean insurance does not benefit them. It is just a simple logic of benefit and cost.
For as low as $25, they can avoid spending more than 5 figures if they need medical evacuation. This seems like a pretty good deal.
So what is travel insurance for?
Travel insurance covers your cost when things go wrong.
You may injure yourself during your hike. Your eardrum might be hurt during scuba diving. Or you may need to cancel your trip due to illness of an immediate family member.
Travel insurance covers all these costs. It is not a substitute for health insurance or vice versa.
2. Choosing the Cheapest Travel Insurance
I hope I have convinced you that travel insurance does benefit you. Now you are looking to buy a travel insurance for your next trip.
But, you notice a problem. Travel insurance comes in different shapes and forms. The pricing varies too.
As a savvy consumer, you might want to choose the cheapest option.
At least not before you read the terms and conditions of the insurance.
Companies exist for one reason – to make profit. Insurance companies are no different. Price is only one of the many factors in choosing insurance. You also have to consider whether is the insurance suitable for you.
Let me give you an example:
Most travel insurance cover mountain trekking only up to 3000m. What if you are going for a trek higher than that?
Imagine you have purchased this insurance. You thought that it covers your needs. But you will be disappointed when you try to claim.
Cheaper insurances are usually limited in their coverage. This might not be a bad thing. But you need to understand whether does it meet your needs.
There is no reason to spend your hard-earned money on things that don’t serve its purpose. It is more important to buy the correct insurance than to buy the cheapest insurance.
3. Choosing more expensive travel insurance
So now you know you should not buy the cheapest. How about buying the most expensive insurance?
First, more expensive insurance doesn’t mean better. Companies differentiate themselves in lots of ways. There may be a reason for their high pricing. But this high pricing might have nothing to do with you.
Second, it all depends on what you need. Expensive insurance usually has a higher claim limits. They also have wider coverages.
The question is:
Do you need it?
Always ask yourself this question before committing to an expensive insurance.
4. Buying Travel Insurance in the Last Minute
As mentioned above, travel insurance covers more than your health. One critical coverage is trip cancellation.
If you buy your travel insurance just minutes before you fly, you are not taking full advantage of it.
Not only that. You are also exposing yourself to the risk of trip cancellation. Unexpected events may happen between the time you pay to the time you leave for your trip.
For example, your immediate family member might suffer from a critical illness. We do not hope that this will happen to anyone. But this is a sad fact.
Trip cancellation usually does not entitle you a refund. But travel insurance can reimburse you for the payment. You can then use this money for the treatment.
So when you should you buy travel insurance?
The moment you pay for your air tickets. The next thing on your mind should be travel insurance.
5. Fail to read the policy wordings
Now you know what’s the biggest mistake relating to travel insurance:
Not buying one in the first place.
So what’s the next biggest mistake?
Not knowing what you are buying.
To understand travel insurance, you have to read the policy.
But there is a problem.
Insurance policy wordings is not like your favourite novel. It can be difficult to read. The good news is it is probably the easiest policy to understand.
It is again, back to what do you need. Reading the policy will help you determine that. You do not want to over insure yourself. Neither do you want to under insure.
You also do not want to assume that the policy covers what’s important to you.
One thing that is important while reading the policy is pre-existing conditions definition. Imagine you want to make a claim due to a relapse during your travel. But the company rejected your claim as it is a pre-existing condition.
Always read the policy in detail. Most companies provide their policy’s conditions online.
6. Buying a Single-trip instead of Annual Insurance
Just to clarify, annual insurance is not for everyone. It is only for frequent travelers. So it is not a mistake per se.
If you are a frequent traveller, make sure to check out annual insurance. They can be more affordable for you.
How do you check?
Let me illustrate one example:
The premium of QBE Travelon Cover is $20 every 3 days, with a minimum of $65. The annual plan is $356. I am using the Standard Plus package and Worldwide coverage as an example.
To calculate the breakeven (number of days where you will be indifferent to both single-trip and annual insurance):
($356 / $20) x 3 = 53.4 days
Do you travel more than 53.4 days per year? If the answer is yes, annual insurance is cheaper for you.
7. Never prepare the paperwork and documents necessary when making a claim
Insurance companies process claims based on evidence. This means that you have to show document proof that the risk events did occur. And it occurs during your trip.
For example, if you lost a valuable in Amsterdam. You have to make a police report there. And submit the report to the insurance company.
Also, you should keep the exchange rate receipt when you change your currency. If you got robbed, insurance companies need to determine how much to indemnify you in SGD.
Finally, keep all your boarding passes until you are back to Singapore. The insurance company may request them to prove that you did travel to the country.
8. Buying direct from insurance company instead of going through an agent
Most insurance companies nowadays are selling travel insurance online. You are just a few clicks away from buying travel insurance. Most of the time, this can also be cheaper than buying from an agent.
But why you should you buy travel insurance through an agent?
You will only realise the value of an agent when you need to submit claims. Even more so when your case is in the grey area.
I have sent a total of 18 emails to an insurance company to process claims. There are numerous rejections and appeals. I was getting frustrated. In the end, it took a total of 6 months before I got my claim.
I could have avoided these frustrations if there is someone who can help me. A good agent will be able to assess your situation. Then he will advise you on the necessary documents. After that, he can follow up with the insurance company.
Ask yourself this question:
Do you prefer to exchange emails with insurance company, or talk to an actual person who can help you?
You might be paying a slight premium (a couple of dollars), but it is worth it for me.
Travel insurance does not solve all your travel worries and risks. But it does offer monetary compensation that can make you feel better. In some cases, travel insurance is necessary.
You wouldn’t want to go for a trek without insurance.
Anthola is a Singapore’s general insurance agency. We advised many clients on their travel risk. We also helped them process their claims.
Are you going for a trip soon? Be sure to drop by our travel insurance platform for a no-obligation quotation. We love to work with you!