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Insurance Article

All about Travel Insurance

October 21 2015

expenses, baggage loss, flight accidents, trip cancellation and other potential losses involved in a domestic or international trip. Ideally, all travelers should opt for a travel insurance policy. However, for international trips, travel insurance becomes more relevant compared to short-duration domestic trips, primarily because hospitalization and medical treatment costs are more expensive abroad than in India.

Travel insurance is mandatory in certain countries, like the Schengen group of countries, for tourist and business visits.

Secure your travel
Secure your travel

A recent survey by ICICI Lombard revealed that only 38% of Indians opt for travel insurance. It also shows that among the remaining 62% respondents, 50% do not opt for travel insurance because they believe that another existing insurance policy, such as a domestic health insurance policy, will suffice to cover their needs during the trip.

History of Travel Insurance

In the early days, travel insurance was restricted to individuals of the upper and middle classes of society, since traveling itself was an expensive affair. Considered as a relatively modern class of insurance, travel insurance became more popular in the last 50 years. This could be attributed to the increase in air travel and the various types of coverage that were included under the travel insurance policy. Initially, travel insurance included only a general accident cover.

However, over the years, its scope was broadened to cover specific expenses that may arise during the, such as illnesses, flight cancellations, terrorist attacks, etc. The Travelers Insurance Company founded by James G. Batterson in USA is considered as the first travel insurance company.

Earlier travel insurance mainly covered accidents
Earlier travel insurance mainly covered accidents

Indian Scenario

The Insurance Regulatory Development Authority of India (IRDAI) is the apex body that governs the functioning of the Indian insurance sector. Travel insurance falls under the General Insurance category and consists of several companies that offer travel insurance products. Government as well as private insurance companies offer policies with suitable schemes and assure excellent service. With the advent of the Internet, the policy cycle from purchase to renewal has become more convenient and transparent. The digital revolution has also influenced the insurance industry. Insurance seekers can avail policy information, compare products, buy a policy, make a claim and renew their policies online with transparency. Some insurance companies feature live chat windows on their portal, where assistance is available 24x7, whether you are purchasing a policy, renewing it or making a claim. This makes the online buying experience hassle-free and helps you make an informed decision at each step.

Assistance at your fingertips
Assistance at your fingertips

Types of Overseas Travel Insurance

  • Corporate travel insurance
  • Student travel insurance
  • Family travel insurance
  • Senior citizen travel insurance
  • Single trip travel insurance
  • Multi-trip travel insurance

Within each of these types, you can opt for a particular plan, such as Gold, Silver, etc. based on your sum assured and the benefits you require. While it is not possible to customize your travel insurance policy extensively, you can decide the size of your cover depending on the cost factors of the country you are visiting.

Benefits of Travel Insurance

ICICI Lombard's survey on travel insurance has revealed that most of the respondents, 82%, opt for travel insurance to cover for medical expenses. Hospitalization and healthcare treatment are expensive abroad, especially in USA and UK. Therefore, this is one of the primary and well-known benefits of a travel insurance policy. It is important to note that an existing health cover, which safeguards you within India, will not be applicable overseas. So opting for a comprehensive travel insurance cover is imperative.

Ensure you complete the paperwork accurately for hassle-free claim
Ensure you complete the paperwork accurately for hassle-free claim

The benefits offered by a travel policy vary based on the insurance provider. However, these are some of the general benefits offered by most insurance companies:

  • Cashless hospitalization in network hospitals
  • Cover for loss of checked-in baggage
  • Reimbursements for trip interruptions or cancellations due to natural disasters, terrorist attacks
  • Emergency lodging extension due to natural calamities
  • Payments against evacuation due to political risks or catastrophes

In addition to these, several value-added services, such as assistance to dependents in India, are also available. There is no fixed limit on how much insurance cover is appropriate for a trip. However, it is advisable to opt for a cover amount that is 4-8% of your total travel cost.

Critical Aspects of Travel Insurance

It is important to purchase a travel insurance policy that suits your needs and covers the potential risks you anticipate in the country you are visiting. Therefore, a thorough study of the policy document is essential before you opt for one. The following aspects should be carefully considered before purchase to avoid future worries or disputes:

Exclusions

Expenses or losses arising from certain diseases, activities, etc. are not covered under a travel insurance policy. Here are some standard exclusions for a travel insurance cover:

  • Pre-existing diseases, sexually transmitted diseases, mental disorders
  • Influence of intoxicants or addictions
  • Naturopathic, homeopathic or Ayurvedic treatments
  • Adventure sports
  • Treatment at health spas or resorts
  • Cosmetic or plastic surgery

Co-pay

Some travel insurance policies have co-pay, where the insured is required to spend for a certain defined part of the expenses. This could be limited to a particular country, activity and percentage based on the terms and conditions in the policy document.

Sub-limits

Travel insurance policies often have sub-limits, such as a cap on the hospital room expenses or doctor's fees. Ensure you understand these before buying a policy to avoid hassles at the time of claim settlement.

Documentation

Incomplete paperwork, failure to understand policy terms and conditions, lack of adequate documents to support claims, etc. can result in unnecessary tension and dispute.

Travel insurance premium

Travel insurance premium depends on various factors such as the country of your visit, plan you have opted for, duration of your stay, level of customization, etc.

 

Traveler Category
Cover size ($)
Duration
Region
Premium (INR)
Individual* (single trip)
15,000-5,00,000
7 days
Worldwide except US/Canada 288-1,188
Student**
50,000-5,00,000
383 days
Worldwide including US/Canada 5,785-52,120
Family*** (single trip)
15,000-5,00,000
7 days
Worldwide except US/Canada 900-1,585
Senior Citizen
30,000-5,00,000
7 days
Worldwide except US/Canada 700-2,369
Annual multi-trip
1,00,000-5,00,000
365 days
(30 days per trip)
Worldwide 3,272-5,405
Source: Economic Times, May 2015

 

 

Indicative figures, can vary based on insurer’s terms and conditions

Assumptions: *Individual is 35 years old
*Student is 18 years old
*Family of 4

Policy extension and cancellation

Extension of the travel policy is possible if you decide to stay back longer than your plan, usually up to 6 months. However, it is best to plan a buffer if you anticipate extensions. It is possible to cancel your policy before the trip, after deduction of a nominal amount, but not during the trip.

Making a claim

The contact details of your insurance provider are available on the policy document. In case of an emergency, notify your insurance company at the earliest to register a claim. Remember to keep relevant bills or other documents safely as proof for the claim.

Purchasing a policy

There are several factors to consider while purchasing a travel insurance policy. When comparing policies, ensure that you consider other aspects apart from premium. Services offered by the insurance provider, timely assistance, period for claim settlement, etc. should be considered before choosing a policy. Opt for a policy that suits your needs based on the nature of your travel, country you are visiting and duration of the trip.

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