Post by Oz-T on Aug 2, 2018 1:29:36 GMT
I think most of us would agree that departing on an overseas holiday without adequate travel insurance is taking a risk. A big issue is understanding exactly what that risk is, and deciding whether we're comfortable with it.
My philosophy regarding insurance of any type follows these principles:
1. The insurance must cover me for an event that would be financially too much for me to bear;
2. There must be a reasonable prospect of the risk happening; and
3. What I pay in a premium is important, but what I'm covered for is vital.
That's why most people insure their house & contents, and car. And there's health insurance, often the most expensive of them all. In each of these, a risk arises if you suffered a loss of the thing you're insuring, and a financial recoupment at least eases the huge problem of repair or replacement.
Some people insure their pets. Using my three rules, I would only do that if I felt that the animal had a reasonable prospect of incurring very expensive vet bills. So the insurance would be more sensible on a young dog or cat than one that was elderly and less likely to be operated on. Importantly, we consider the risk of having to pay the bills, not the risk of the pet needing the operation.
So that brings us to travel insurance. I always purchase travel insurance for overseas trips because without it, I am exposed to a financial risk, mainly hospital/medical and travel/tour cancellations. It'll usually cover other items such as rental cars, luggage etc. In all my travels, I've only once made a claim on my travel insurance - about $300 to repair a compact camera LCD screen that didn't cope too well when it was dropped onto the road near the Leaning Tower of Pisa. The ironic thing was that I'd purchased the insurance for the big-ticket risks and only made this small claim when I remembered that it covered my camera.
There are many places where you may select a travel insurance policy, but I usually find that my travel agent's preferred insurer is usually ok and reasonably priced. But I do check to ensure I'm properly covered for what I need, and not paying a higher premium for something I don't require. For example, I was once quoted a premium for insurance that had unlimited cover for cancellations. But tweaking that cancellation cover back to the actual cost of the flights and tour reduced the premium by $80. Insurance companies hope that you don't notice these types of things.
But the main reason that prompted me to initiate this discussion about travel insurance is a concern I have about people who are under-insured, but seriously think they aren't. Here's an example:
I'm not sure whether it's available outside Australia, but here, we have a credit card product called a Platinum Card, issued by some of the banks. Typically, you get charged an annual fee for the card, that could be around $100, but as high as $375. And the interest rate on these cards is absurdly high (around 19%-21%) and although you would be mad to pay this, people do get themselves into trouble. One of the highly advertised features is the 'free' travel insurance that comes with the card. When I was first made aware of this several years ago, I was actually annoyed with myself for paying for insurance all those years when there was a freebie available all along. But a bit of additional research made me rest easy: things are not as they seem.
A more careful reading of the product disclosure document reveals the fatal problem: medical/hospital cover. "It's fantastic", my friends would declare, "we're covered for up to $8,000 if we're overseas and get admitted to hospital". True, but a reading of the fine print sort of spoils the party: you're only covered for $75 per day. So to me, you're only covered for 107 consecutive days before you're on your own. But the more ghastly aspect of this is apparent when you wonder which hospital in the world is only going to charge $75 per day. I've heard enough horror stories of people being admitted to hospitals and getting charged $2000 or more per day (perhaps our USA members would like to contribute their thoughts on this?). To me, such enormous costs end up reducing the status of $75 cover to something akin to petty cash.
A few years back, a friend of a friend suffered the tragedy of a heart attack whilst on a cruise to New Caledonia and Vanuatu (the same cruise we went on at a different time). The man had to be airlifted back to the islands, then placed on an emergency medical flight back to Australia and then into hospital for a couple of days when sadly, he died. In addition to losing her husband, the poor widow then received a bill for $30,000, none of it recoverable because they hadn't taken out travel insurance that would have cost a mere $180. And if they had one of these 'free' credit card insurance policies, the insurer might've paid a claim of a couple of day's hospital (i.e. $150). This is scary stuff.
Now, to be fair, banks and other businesses do sell travel insurance products in addition to their 'free' product included with credit cards, and these products usually have better levels of cover. And the Platinum Card insurance policy is a reasonable basic product that may suit many people if they don't require much in the way of cover, especially for hospital stays. The main point that I a making is that like any insurance policy, travel insurance policies do require some careful reading of the contract so you understand exactly what you're covered for, and what you're not. Then make your decision.
My philosophy regarding insurance of any type follows these principles:
1. The insurance must cover me for an event that would be financially too much for me to bear;
2. There must be a reasonable prospect of the risk happening; and
3. What I pay in a premium is important, but what I'm covered for is vital.
That's why most people insure their house & contents, and car. And there's health insurance, often the most expensive of them all. In each of these, a risk arises if you suffered a loss of the thing you're insuring, and a financial recoupment at least eases the huge problem of repair or replacement.
Some people insure their pets. Using my three rules, I would only do that if I felt that the animal had a reasonable prospect of incurring very expensive vet bills. So the insurance would be more sensible on a young dog or cat than one that was elderly and less likely to be operated on. Importantly, we consider the risk of having to pay the bills, not the risk of the pet needing the operation.
So that brings us to travel insurance. I always purchase travel insurance for overseas trips because without it, I am exposed to a financial risk, mainly hospital/medical and travel/tour cancellations. It'll usually cover other items such as rental cars, luggage etc. In all my travels, I've only once made a claim on my travel insurance - about $300 to repair a compact camera LCD screen that didn't cope too well when it was dropped onto the road near the Leaning Tower of Pisa. The ironic thing was that I'd purchased the insurance for the big-ticket risks and only made this small claim when I remembered that it covered my camera.
There are many places where you may select a travel insurance policy, but I usually find that my travel agent's preferred insurer is usually ok and reasonably priced. But I do check to ensure I'm properly covered for what I need, and not paying a higher premium for something I don't require. For example, I was once quoted a premium for insurance that had unlimited cover for cancellations. But tweaking that cancellation cover back to the actual cost of the flights and tour reduced the premium by $80. Insurance companies hope that you don't notice these types of things.
But the main reason that prompted me to initiate this discussion about travel insurance is a concern I have about people who are under-insured, but seriously think they aren't. Here's an example:
I'm not sure whether it's available outside Australia, but here, we have a credit card product called a Platinum Card, issued by some of the banks. Typically, you get charged an annual fee for the card, that could be around $100, but as high as $375. And the interest rate on these cards is absurdly high (around 19%-21%) and although you would be mad to pay this, people do get themselves into trouble. One of the highly advertised features is the 'free' travel insurance that comes with the card. When I was first made aware of this several years ago, I was actually annoyed with myself for paying for insurance all those years when there was a freebie available all along. But a bit of additional research made me rest easy: things are not as they seem.
A more careful reading of the product disclosure document reveals the fatal problem: medical/hospital cover. "It's fantastic", my friends would declare, "we're covered for up to $8,000 if we're overseas and get admitted to hospital". True, but a reading of the fine print sort of spoils the party: you're only covered for $75 per day. So to me, you're only covered for 107 consecutive days before you're on your own. But the more ghastly aspect of this is apparent when you wonder which hospital in the world is only going to charge $75 per day. I've heard enough horror stories of people being admitted to hospitals and getting charged $2000 or more per day (perhaps our USA members would like to contribute their thoughts on this?). To me, such enormous costs end up reducing the status of $75 cover to something akin to petty cash.
A few years back, a friend of a friend suffered the tragedy of a heart attack whilst on a cruise to New Caledonia and Vanuatu (the same cruise we went on at a different time). The man had to be airlifted back to the islands, then placed on an emergency medical flight back to Australia and then into hospital for a couple of days when sadly, he died. In addition to losing her husband, the poor widow then received a bill for $30,000, none of it recoverable because they hadn't taken out travel insurance that would have cost a mere $180. And if they had one of these 'free' credit card insurance policies, the insurer might've paid a claim of a couple of day's hospital (i.e. $150). This is scary stuff.
Now, to be fair, banks and other businesses do sell travel insurance products in addition to their 'free' product included with credit cards, and these products usually have better levels of cover. And the Platinum Card insurance policy is a reasonable basic product that may suit many people if they don't require much in the way of cover, especially for hospital stays. The main point that I a making is that like any insurance policy, travel insurance policies do require some careful reading of the contract so you understand exactly what you're covered for, and what you're not. Then make your decision.