Basic guide for travel insurance

Some people think that it is a waste of money, the travel agent is trying to make more money, or it is a good-to-have-but-not-necessary thing. But travel insurance is an important coverage when travelling.

Accidents do happen, no matter how well you plan for it:
What if the travel agency defaults?
What if you fall ill just before the trip?
What if your baggage gets stolen during transit?
What does Travel Insurance cover?

Some of the more common coverage for travel insurance includes:

Travel Cancellation

Covers loss of irredeemable travel and accommodation expenses paid in advance and occurring within 30 days before the trip

Travel Postponement

Covers additional travel and accommodation expenses incurred and non-refundable or unutilised portion of travel costs prepaid in advance, if the trip is postponed.

Travel Delay

A cash benefit will be payable for every pre-specified number of hours of travel delay.

Baggage Delay

A cash benefit will be payable for everypre-specified number of hours the insured's baggage is delayed.

Loss or Damage to Baggage

Covers loss or damage to the insured's baggage and personal effects as a result of an accident occurring while overseas.

Personal Accident

Covers Death and Disablement resulting from an accident.

Medical Expenses Incurred Overseas

Covers medical expenses incurred for medical treatment received while overseas.

Medical Expenses Incurred in Singapore

Covers follow-up medical expenses within a pre-specified number of days from return date.

Hospitalization Allowance

A cash benefit will be payable for every complete day the insured is hospitalised overseas.

Emergency Medical Evacuation and Repatriation

If it is necessary to evacuate the insured to the nearest registered medical institution or return to Singapore in the case of an accident or illness, the insurer will pay for the cost of transportation and en-route medical care. In the event of death, the insurer will pay for the costs incurred in returning the body to Singapore

Compassionate Visit by a Relative or Friend

If the insured is hospitalised overseas with no family member around, the insurer will reimburse the accommodation and travelling expenses incurred for a relative or friend to fly over and remain with the insured.

However, do note that policy wordings differ between insurers, so the benefits and type of coverage would be different. The amount of coverage is also subject to the type of plan that you purchase.

Why Buy Travel Insurance?

Planning for a holiday should be a happy event, so thinking of travel insurance - which is closely related to thinking of how things could go wrong during the holiday - is definitely not the most thrilling topic to consider.

Most people go for their vacations, enjoy themselves and come home without any unfortunate incidents, but a small percentage of people will find that their holiday has transformed into a nightmare. An unforeseen accident may occur, their flights get cancelled, or they lose their travel documents. In such circumstances, trying to get help could not only get extremely expensive, but also horribly stressful. And people end up thinking, "If I had purchased travel insurance, I wouldn't have to fork out the additional $4,000 for hospitalisation expenses..."

The most important benefit of buying travel insurance is the peace of mind it grants to the traveller. It protects you and your trip. It covers you for medical expenses and accidents, and protects your trip in the event of a flight delay or trip cancellation

Things To Look Out For

1) Buy it early

Buy your travel insurance early, pref¬erably right after booking the trip. It may not be something to look forward to - another upfront pay¬ment right after paying for the holi¬day - but at least one of the key coverage, travel cancellation, is still valid. Buy it one day before your trip, and you are practically throwing this benefit away.

2) Cover the whole time you are away

This may sound obvious, but some people actually do not cover them¬selves for the whole trip. Make sure you cover yourself for the full trip, even if you depart from Singapore late at night on the first day and return early in the morning on the last day.

3) Check what is included

Other than the standard coverage mentioned above, check whether you need anything extra. If you are going overseas for activities like skiing, scuba diving or mountain climbing, make sure that the policy covers these activities specifically to ensure that in the event of an accident, you will still be covered.

It may not sound like the most interesting thing to do, but read through the policy details to understand the definition of each coverage. Either that, or get an expert or financial adviser to explain to you what each term represents.

4) Check what is not included

Premiums aren't everything. A cheap travel insurance policy may seem like a good bargain, but make sure you go through the policy details carefully to ensure that important coverage is not omitted.

Coverage does not include accidents that occur while under the influence of alcohol or drugs. Pre-existing conditions are not covered as well. If you did not take the proper and reasonable precautions to prevent any accidents, the insurer may not accept the claim too. For example, if you did not lock your hotel room and your baggage gets stolen, don't expect your claim to be successful. The travel insurance policy isn't for you to behave more recklessly than you normally would!

Finally, read through the fine print. You may be surprised to find out what it says.

5) Single trip or annual trip? Individual or family policy? Will you be going on a single trip only?

Most people take two to three holidays a year, and an annual trip policy would probably be the best value for money. But do note the area of coverage. An annual trip policy covering only ASEAN countries will not cover a holiday to New Zealand, for example. Also, annual trip policies usually cover a limited number of days per trip, so it's definitely not for you if you plan to travel for a few months.

If you are travelling as a family, a family policy might be the better-priced option. Family policies usually cover one or two adults traveling with any number of children. However, note that some insurers impose a limit on the amount of coverage for children.

6) Keep all relevant travel documents

When travelling, remember to bring your travel insurance policy document and the insurer's 24-hour emergency hotline. Keep all relevant documents and paperwork, like receipts, medical bills, and police reports. They will be required as evidence when making a claim.

7) Do some research before the trip

The term "research" here doesn't refer to which hotel to stay at or which places to visit in the country. It is about other issues, like how the weather is? Is the crime rate high? Will you be renting a car to drive? These will give you a better idea of what precautions to take and which travel insurance policy to purchase.

8) How much travel insurance to buy?

This depends largely on the cost of your trip. For a short trip to a nearby country, you may just want to purchase a cheaper plan with lower coverage. For a major trip to, say, Europe, you could consider buying a plan with higher coverage.

The Bottom Line

"Buy travel insurance, no matter where you are going. It's affordable - $30 may be able to cover you for a 4-day trip to Thailand, depending on the insurer and type of plan you purchase. Be aware of any specific coverage you require and choose a policy that covers it. And buy it early, preferably right after you have confirmed your trip. Travellers may be diligent about planning for their vacation, but some fail to plan for the unplanned - the things that happen beyond the scope of our control. Travel insurance is the kind of insurance you hope you never need to use, but you will definitely be glad to have it in times of need."