Factors Affecting the Cost of Travel Insurance

Travel insurance policies come in different types of packages, with all kinds of options and choices. It’s designed this way for a reason, of course. You don’t want to pay for coverage you’re unlikely to need, or skimp on coverage you should have.

A basic policy may be adequate, or you may be more comfortable paying a little more for higher levels of coverage as needed. It often depends on where you plan to travel. Suppose you are planning to travel to a destination like Madagascar, which has limited medical facilities. In the event of a serious medical emergency, you may need to be flown by air ambulance to another country for treatment. Therefore, it would be wise to choose a policy that offers maximum coverage for medical emergencies. It must also include coverage for air ambulance and medical repatriation. If you check you may find that a very cheap policy does not include this coverage.

You will need to decide whether to go for a single trip or annual multi-trip policy. If there is a chance that you may be able to take more than one trip in a year, the annual policy is usually the best value for money. In many policies children are included for free, which is a great saving for family vacations.

Travel insurance premiums typically increase depending on where in the world you are traveling. For example, the cost of travel insurance for a British citizen traveling to Europe would be less than if he were flying long-haul to a destination such as North America or Australia.

Most travel insurance companies offer different levels of coverage for you to choose from. Paying a little more for the next tier should affect how much the insurer will pay for a claim or increase the number of items covered. Pay attention to the amount of Excess (Deductible) included, since it can be much higher in a cheap policy. (This is the amount you have to pay for a claim.) To keep the premium very low, coverage levels have often been reduced or the amount of the Excess increased.

When it comes to pre-existing medical conditions, the cost can rise dramatically for serious pre-existing conditions, or the insurer may not offer coverage at all. However, more often than not, the average company will agree to cover a specific condition for an additional premium, or with the understanding that any claim related to the condition is excluded. This can be a bitter pill to swallow for those who are affected.

Unfortunately, it is a fact that travel insurance for seniors is often more expensive due to the supposed increased risk of a medical problem arising, even though our seniors are probably healthier these days than ever!

Winter sports (ski/snowboard) insurance can be added to a typical travel insurance policy for an additional fee. Other add-ons may include coverage for activities such as:

• Business insurance – additional premium to cover many travel-related risks associated with business travel
• Golf Insurance – Additional coverage for mishaps related to a golf vacation to cover lost or stolen equipment, golf equipment rental and prepaid green fees

When it comes to activities considered by insurers to be ‘hazardous’, coverage can vary greatly between policies and companies. It is important to check and understand what activities are covered as standard. A typical policy will include activities that you may engage in on a casual, unplanned or ‘incidental’ basis. An additional premium may be required to provide coverage for activities that are considered planned or ‘non-incidental’. Confused? Don’t worry, it’s not as complicated as it seems! Here are some examples to show the difference:

“Incidental” generally refers to activities such as a bungee jump, elephant ride, or sleigh ride that you may decide to participate in on the spur of the moment. ‘Non-incidental’ or planned activities refer to those that are engaged in on a regular or non-causal basis. For example: the activity is the Main purpose of the trip, such as a sailing holiday, diving holiday, safari, whitewater rafting or bicycle touring.

There is no doubt that insurance can be a difficult subject to understand – most people would rather spend their precious free time doing something much more interesting and fun!

The bottom line is that if you don’t have time to go into it in detail, make sure the policy you choose contains, at a minimum, adequate coverage for potentially costly travel problems related to: Medical Expenses, Medical Repatriation, Air Ambulance, Personal Liability and Legal Expenses. A good basic policy and even a backpacker policy should contain these as standard. Pay a little more and you’ll get more features.

Beware of that cheap policy offered as an incentive: it may not always be a good buy. You get what you pay for, and peace of mind is priceless!