Travel Insurance: Some Information

I've found an article from AIA Singapore website which contains useful information about travel insurance. All of this information is directly quoted from http://www.aia.com.sg/Content.asp?ca_typeid=9&ca_categoryid=2&ca_articleid=1 for personal education purpose. Some formatting has been modified for personal notes.

The holiday season is here again! Before you take off for that long awaited and exciting trip to the Caribbean Islands, the Swiss-Alps or a fun-filled time in Disneyland, make sure you have everything ready: Passport, camera, toothbrush... ...and don't forget your travel insurance. For those of you who are not familiar, here's a quick guide to understanding your travel insurance needs and to getting the right package for your trip.

Annual Policy
Most insurance companies offer travel insurance on annual basis as well as per trip basis. Annual policies cover unlimited trips made by the insured during the entire year provided that each trip does not exceed a certain number of days, usually 90 days. No declaration is required. For frequent flyers, this type of cover would be most ideal in terms of cost and convenience. The premium for annual travel policies varies only slightly among insurance companies, averaging around S$300 for travel within Asia and S$400 for travel worldwide (for the individual).

Family Packages
Family packages are also designed to cater for immediate families traveling together. Definition of immediate families would mean the insured person, the insured person's spouse and children. Family packages are usually priced at a lower premium than if individual policies were to be taken up for the whole family. Although annual policies are also provided for families, such plans are generally not as popular as the annual policies for individuals, reason being that most parents with children who are still schooling are unlikely to make than 2 trips in a year due to school holiday-and-examination constraints.

"Phone-and-Fly"
Ever heard of "phone-and-fly" program? A number of insurance companies are now offering this 24-hour service at no extra cost. Register yourself as a member, and you may call up anytime of the day from anywhere in Singapore before your flight to activate your travel insurance. It is travel insurance made easy, especially for busy executives who cannot afford the time to make their way down to the insurance company each time they go on a trip. Now, even "last-minute" travelers can simply pick up a phone to activate their travel insurance in Changi Airport just minutes before their plane takes off. However, please take note that, if you are doing this for the first time, the insurance company may need time to process your registration before you can have access to this "dial-in" facility.

24-Hour Emergency Assistance and Information Service
Some of these 24-hour services even offer information on visa requirements, foreign exchange, weather forecasts and medical advice et cetera. Very helpful indeed for inexperienced travelers or for those who are traveling to more remote and less traveled places. These service centers may also offer emergency assistance in the form of embassy, legal, interpreter and medical referrals. Most importantly, they can arrange for emergency medical evacuation in case of a major accident.

Insurance Benefits and Limits of Coverage
So what are the benefits and limits of coverage to look out for in a travel policy? A standard travel insurance package should include coverage for Emergency Evacuation, Baggage Delay, Baggage Loss, Flight Delay, Hospital Cash, Hospital or Medical Reimbursement, Hijack, Loss of Money or Personal Belongings, Missed Connections, Overbooked Flights, Personal Accident, Personal Liability, Trip Curtailment and Trip Cancellation. Some insurance companies even insure against the loss or theft of golfing equipment and laptops.

The limit of coverage for emergency evacuation ranges from S$500,000 to an unlimited "cost-incurred" amount depending on your choice of plan. Compensation for flight and baggage delay are usually in the region of S$500 or S$1,000. This feature comes along with a "Time" excess, meaning that the insurance companies only compensate when the delay exceeds a certain time frame. The limit for loss of baggage varies from a couple of thousand dollars to S$10,000, usually with a cap for individual items. Most insurance companies would compensate a couple of hundred dollars for each day of hospitalization up to the maximum limit indicated in their respective packages. This is solely to compensate the insured for the number of days spent in a hospital overseas and should not be mistaken as hospital or medical reimbursement, which takes care of the hospital and ward charges. The limit may range between S$100,000 to S$500,000. Personal accident coverage, which is to compensate the insured for permanent or temporary disablement or death as a result of an accident, generally comes in limits of S$100,000, S$150,000 or S$200,000. Personal Liability is important in case of legal liability, arising out of one's negligence in causing a third party injury (or death) and/or third party property damage. The limit for this cover ranges from S$500,000 upwards (S$1 million is not uncommon).

Special Features
Go for insurance companies that offer nil deductibles. Otherwise, you may end up having to bear the first S$40 or S$50 of every claim that you make. For those of you who intend to engage in water or winter sports during your trip, it would be wise to take up your travel policy with insurers who offer free coverage for such activities. Some insurance companies may charge an additional premium for this extension, so it is better to clarify this point before you effect your cover. Unfortunately, the definition of water sports in the typical travel policy does not include scuba diving. Not surprisingly, bungee jumping is also excluded from most travel policies. Watch out for age limits imposed by some insurance companies, meaning that persons exceeding a certain age (most commonly 65 years) are excluded from their travel coverage. But if you belong to this elderly group, fret not. There are insurance companies that do not impose any age limit and offer the same coverage at no additional premium loading. A unique coverage that is being offered in the insurance market is the "Car Rental Excess". This feature takes care of the excess amount that the insured normally has to bear (under the motor policy taken up at car rental companies) in the event of damage to the rented vehicle while driving overseas.

Premium Computation
For "per-trip" policies, the premium payable hinges considerably on the number of days of travel, the country of destination and choice of plan. For example, a trip to Europe or The United States of America warrants a much higher premium than a trip to Asia for the same number of days. Some insurance companies provide the option of higher limits of coverage at of course, a higher premium. If price is of concern, it is advisable to keep on hand the premium schedule from a couple of insurance companies for comparison before you activate your travel insurance before each trip. All premiums are non-negotiable as travel insurance policies are standard packages and are not "custom-made". Once taken up, no cancellation of policy and refund of premium are allowed. This is especially so if the policy offers the coverage of "Trip Cancellation", which reimburses the insured for any deposit or expenditure incurred for the forthcoming trip, in the event that the trip has to be cancelled due to an emergency such as a sudden death in the immediate family or that of a business partner or even bankruptcy of the travel agent.

Claim Procedure
All insurance companies will require claimants to lodge their claims within a certain time frame. Claimants would be required to complete and submit a claim form, which can be obtained from their respective insurance companies. In almost all instances, claims must be accompanied by relevant documents, such as medical receipts for medical reimbursement or hospital cash; a police report for loss of money or personal documents; an official letter from the airline in cases of flight or baggage delay and loss of baggage if within custody of the airline. In all cases, call up and inform your insurance company immediately for necessary advice.

There you are... now with a basic knowledge of travel insurance, you are equipped to choose the travel policy best suited to your needs and you are all set to fly!

Bon Voyage!

Note: The intention of this article is to highlight the various features available in a travel insurance package (list is not exhaustive) and not to elect the best package or cheapest premiums that are being offered in town. No mention or reference to any specific insurance company is made. Each travel insurance package is different and superior in different areas. Readers are encouraged to explore these differences and decide on the one best suited to their needs.

Source: Financial Planner, written by Grace Khew