What To Consider While Buying Travel Insurance

A travel insurance policy is a must when going for an international holiday, but it isn’t enough to buy a policy off the shelf. There are several details that need careful attention.

An insurance cover for an international holiday might seem like an excessive precaution, but only till you actually feel the need for one. In fact, such a policy is essential to avoid the risk of significant financial costs, as expenses can be much higher in other countries.

Moreover, the choice of policy—between a floater or a multi-member individual policy—can make all the difference in the final analysis.

The medical cost in foreign countries is usually prohibitively expensive, particularly in European countries and in the U.S. This is particularly true for tourists, who can’t avail themselves of government-sponsored health programmes in those countries.

This is where travel insurance comes into the picture. It can help an individual bear the cost of treatment. Some countries actually require the traveller to have adequate insurance before they even issue a visa. Thus, in such cases, taking out insurance becomes a basic requirement that must be fulfilled.

Something that is often missed out is that, unlike local medical insurance, where there is just coverage for the hospitalisation, the scope is much wider in the case of travel insurance. Here, things like loss of baggage, loss of passport, and cancellation of trip are also covered.

The sum insured is very important, because this determines what might be the burden on an individual in the event of a mishap. Normally, people look at the figures for which the insurance is available, and here, insurance companies give multiple options, starting with a certain amount as the base figure.

People tend to consider the amount and then convert it into Indian rupees and see the extent of the coverage. That is not the right way to look at the insurance coverage. It is important to decide the coverage based on the cost of medical services in the country being visited.

The other thing is that a lot of these policies will have a co-pay option. This means that the individual will have to bear some of the expense. The premium paid is lower if the co-pay amount is higher.

There are floater policies available for the entire family, which provide an individual with a choice about the extent of the coverage they want. A single cover for the entire family may not be enough. This is especially true if multiple members of the party fall ill.

Rather, a multi-member individual policy might be preferable, as it has a separate limit for each individual.

For example, a $100,000 cover under a floater policy would have this limit as a total across say three family members who are travelling, while under a multi-member individual policy, there would be $100,000 coverage for each of the three members individually.

A single premium must be paid for all the members of the floater policy together instead of paying individual premiums for travellers under the multi-member policy. The premium for the latter would be higher.

Arnav Pandya is the founder, Moneyeduschool.