November 25, 2007

Travel Insurance

Traveler’s best friend in a foreign land

By Rahul Aggarwal

Indians are traveling like never before. With the boom in international travel, travel insurance has also gained popularity. Travel Insurance is necessary since it pays for financial losses in different situations.

A traveller is exposed to many risks inspite of detailed planning. Loss of luggage or missing of a connecting flight or similar other reasons can cause financial hardship to the traveller. Since travel Insurance policy is going to be a traveler’s best friend in need, in a foreign land, it is important that this friend is chosen with care.

Most travelers depend upon their travel agent to arrange the insurance for them. Travel agents are not insurance professionals who understand the various travel insurance products on offer. Since their expertise lies in arranging the best travel and stay options, it falls upon the traveler either to understand the various policies on offer and choose one that fits best or engage a knowledgeable broker to do this task.

Relevance  of the Travel Insurance (Examples) :

1. A family got stuck in a snow storm on their vacation to a European country. One of the family members fell sick due to the extreme cold. The family had to be evacuated to a safer location which had proper medical facilities to save this person’s life. The total cost of evacuation came to US $ 25,000/- . Since the travel policy did not cover evacuation, the family had to bear this unforeseen expenditure which was many times more than their total vacation budget. A policy chosen with care would have taken care of this expense.

2. A business traveler, who had checked out of his hotel and was on his way to the airport, was robbed of his wallet and his briefcase in USA. He lost his cash, traveler’s cheques, credit cards and air tickets. Luckily, he did not lose his mobile phone. He sent an SMS to office in India which arranged some emergency cash for him through a business contact. However, he had to go without food and lodging for 24 traumatic hours. Had his travel policy carried an emergency cash clause, he could have availed of his benefit from the local policy administrator.

3. If a person of higher age is a co-traveler, it is important that the fine print is studied carefully. Most insurers limit the per illness reimbursement in case of persons aged between 56 years to 85 years. While one insurer imposes a per day expense limit on persons above the age of 56 years another insurer imposes a per illness limit of US $ 15,000/- on persons above the age of 70 years. Hence, it is important to know extent of these limits and the age at which these limits are imposed.

Many insurance companies bundle travel assistance services along with their travel policies. These services typically include assistance in contacting a suitable medical facility near an individual’s  location, assistance in securing the availability of services of local Physician and arranging medical services, lost travel documents assistance, Emergency Message Transmission services and Embassy Referral Services. These services come free of cost. Although they may not seem to be much while buying a policy, they sometimes prove to be life savers in an unknown place.

A travel insurance policy covers many exigencies other than reimbursement of medical expenses. The policy can cover Accidental Death & Disability, Loss of Luggage, Loss of Passport, Baggage Delay, Trip Delay, Trip Cancellation, Missed Connection, Dental Relief, Personal Liability, Emergency Medical Evacuation, Repatriation of Remains, Emergency Cash Advance, Hijack Distress, Hospital Cash and Home Insurance while an individual is traveling.

Different insurance companies offer different benefits. Choose a plan that suits you best. Remember, upto certain age limit, the chance of one using the Trip Delay benefit or the Missed Connection Benefit are more than the chance of one using the Medical Expenses Benefit. Hence these small bells and whistles do matter.

The author is CEO, Optima Insurance Brokers Pvt Ltd. He is an alumnus of the IIM, Ahmedabad. The views expressed in this article are his own. He can be contacted at Rahul.a@optima.co.in