How to Buy Travel Insurance: Do Your Homework

Given the number of travel insurance plans in the marketplace, how can you be sure you’re getting the best? Or the cheapest? What do you look for when seeking out a plan that fits your needs and your health condition?

This coming Saturday, August 14th, the Toronto Star will feature Personal Finance Columnist James Daw’s annual survey of travel insurance plans available to the general public. The survey is broad, and it includes information on dozens of plans, contact numbers, price ranges for various age groups. You’ll also find articles quoting travel insurance specialists offering perspectives on product trends, as well as what to look for when shopping for travel insurance.

What the survey illustrates is that, though there are more plans than ever, you still need to do your homework when looking for one that gives you the coverage you need for your age, your health status, and even your destination. No two plans are exactly alike. Some will cover you if you’ve had a heart attack within the past year; others won’t. Some will consider you ineligible if you take more than three, four, or five medications; others will allow it as long as you meet certain criteria. Some will say they cover you for up to $5 million; others will cover $2 million. Does it make a difference? (Not really. No insurer is going to let you run up that sizeable a tab in a foreign hospital if they can airlift you back home. And if they choose to do so, they have the right.)

So how do you find the best plan?

  • Do not start by picking the one with the lowest price without looking at the limitations and exclusions. And don’t necessarily select the one with the highest premium assuming that the higher the price, the better the product. Insurance has to be tailored to your individual needs: age, health status, duration of your trip, etc. When comparing premiums, make sure you are comparing plans with the same limits, benefits, and conditions.
  • Consider alternatives to the single-trip plan. If you travel more than once a year, or if you’re planning on breaking up your six-month trip to the South by going home for a week at Christmas, you might find the annual plan quite a bit cheaper than two separate single-trip plans.
  • If you have a retiree/pension plan that covers you for a limited period (usually 40 or 60 days), or if you are a superannuate with coverage under a public service health plan, consider using that coverage with an appropriate top-up from a dedicated travel insurer. But CAUTION: There are potential gaps and traps in making such top-ups, so do so only with a travel insurance specialist who can make sure that your coverage remains seamless and covers you fully. This is no game for amateurs.
  • If you are taking any medications, or if you see your doctor periodically for what you consider a stable condition, or if you’ve had surgery or hospitalizations in the past, you need to disclose these details to your insurer. If you submit a claim for medical services and your insurer finds evidence of that ulcer you “forgot” about, or learns that you took blood pressure medication and didn’t report it, your claim could be disqualified.
  • Consider a deductible. It may significantly lower your premium. The greater the deductible, the lower your premium.
  • When you see insurers claiming that they “cover pre-existing conditions,” take that with a grain of salt. All insurers cover certain pre-existing conditions—up to a point. Many people in less-than-perfect health can now find coverage they would not have been covered for even a couple of years ago. But there are limits and conditions. Make sure you know what those limits are. One thing is certain: No insurer covers all pre-existing conditions. If you doubt me, try calling an insurer from your hospital bed after just having a lobe of your lung removed, and see what they say.
  • If you’re not travelling to the United States, you might get a discount on your premiums. That’s because hospital costs in the US are so expensive. Many travel insurers now offer non-USA plans.

Most important, don’t leave your shopping until the day before you leave. That’s not enough time to make an intelligent choice.  Give yourself enough time to assess several plans, and even check with your doctor if you’re unsure of medical questions.

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