Leaving home without packing travel insurance is as irresponsible as it is unnecessary. Medical emergencies, natural disasters or civil upheaval, grounding for terrorist threats or health pandemics can cost you, big time. We have seen what one underwear bomber can do to the world’s airline schedules.
Travel insurance can offer substantial protection against these disruptions. But it’s not perfect. There are exclusions. There are limitations. And it’s not as cheap as it used to be. Still, it’s a bargain compared to the other costs you will be paying out for your vacation or business trip.
How, then, can you find the best deal, without risking inadequate coverage? Your age, your health, your duration of travel, even your destination—all can affect the price you pay and the adequacy of the plan you choose. This is not a product to pick off a shelf. But just because the one you choose may be more expensive than the one your neighbour bought, that doesn’t mean it’s better for you. Age, health status, duration, or location of travel all affect the price you pay.
Here are some tips for saving money on your travel insurance.
Take a deductible. Offering to pay the first $100, $500, $1,000, or more of a medical claim can reduce your premiums substantially. Remember, you only have to pay this deductible if you have a medical emergency requiring treatment. But the savings on your premiums are real and they can accumulate over the years. You probably pay a deductible for your car or home insurance, so you know the value of the trade-off.
Buy early. Many travel plans base their premiums on your age at the time of application. If you have a birthday coming up that may bump you into a more senior age category, and you already know when you intend to travel, buy while you’re still in the younger age group. Caution: If your health status changes between the time you buy and the time you travel (e.g., new symptoms, a change of medications, a hospitalization, referral to a specialist, etc.), you must notify your insurer immediately. If you don’t, and you have a claim, the insurer may invalidate your policy.
Early Bird specials. Some insurers specializing in the snowbird market offer plans for future travel at current or last season’s rates, before new increased fall premiums set in. They do it to improve their cash flow during the slow months. This can be a good deal if you are sure of your travel plans. But again, if anything changes between the time you buy and your scheduled departure, you must notify your insurer so they can adjust the terms of your contract. That’s your responsibility. It can be very costly if you neglect it.
Consider joining affinity groups or associations such as the Canadian Snowbird Association, or CARP, or your local motor league, or similar groups that negotiate preferred rates with travel insurers for their members. The costs of joining such groups are negligible and the savings on travel insurance can be quite considerable. But remember, even when you are part of a group, you still need to read the fine print, pick your plan carefully, and answer any health questions fully and accurately. If you run into a claim problem, that’s between you and the insurer.
Compare apples to apples. When assessing plans, make sure you are making direct comparisons. Don’t compare the price of a plan with a $50 deductible to one with a $500 deductible, or one without trip cancellation benefits to one that has them. Also, make sure you are comparing plans for like age groups and with similar coverage for pre-existing conditions or travel duration. The longer your trip, the more expensive it is per day. Your neighbour may be paying $4.50 per day for a 90-day trip, but you can expect to pay more per day for a 180-day trip. It’s all a matter of risk. The longer you are out of the country, the greater the chance you may encounter a medical problem while out of the country. And don’t be swayed too much by plans that promise $5 million in coverage compared to those that promise “only” $2 million. That is not a blank cheque for you to spend. Your insurer will not leave you in a foreign hospital long enough to run up a $5 million bill—not with all of the air ambulance services available to bring you home safely.
Consider annual multi-trip plans. If you know you’re going to travel more than once a year, consider annual or multi-trip plans. These can be a lot cheaper than buying two or three separate single-trip plans each year. The multi-trip plan allows you to take an unlimited number of trips up to a maximum duration (e.g., 15, 30, 60, 90 days or more) over the course of a year. The policy is priced on the specified trip duration. The shorter the duration, the lower the price. And it doesn’t matter how many times you travel so long as you don’t exceed the specified duration in any one segment and you don’t combine segments: you must return to your home province for at least one day before starting your next segment. Best of all, you don’t have to tell your insurer when you are using your segments. No need for additional paperwork each time you travel. Caution: If during one of your segments you claim for a medical emergency, you must notify your insurer as that condition will likely be considered pre-existing for any subsequent segments. And that will change the terms of your contract.
Look at plans from multiple insurers. Though most insurers offer similar benefit packages, their prices as well as exclusions and limitations on coverage may differ, so shop for different products. You wouldn’t buy a flat-screen TV after looking at only one product, would you? Ask questions. And because travel insurance companies offer different products through brokers, associations, motor leagues, and banks, they may go under different brand names but still be essentially the same product. Manulife Financial offers dozens of plans under different names and at varying prices through brokers, association, banks, affinity groups, motor leagues, and so on. So do RBC, ETFS, Travel Insurance Co-ordinators, Travel Underwriters, Travel Guard, and a handful of other firms. To get the best overview of what different plans and prices are available, investigate the offerings of different insurance companies. The best way to do that is to deal with a broker who knows travel insurance and deals with at least several of these companies.
The bottom line is that the best way to get value, or to save money, is to make sure you get the right travel insurance for your specific need. “Cheap” insurance can be awfully expensive if it’s the wrong kind for you.