Travel policy: Tailor sum insured to destination country's healthcare costs

Don't accept any cover that comes with your travel package; understand coverage, exclusions and sub-limits, then buy

With the festival season approaching, many Indians are preparing for international vacations. While they are likely to expend significant time and effort on crafting the perfect itinerary, and selecting ideal destinations, flights, and accommodations, travellers often overlook the importance of carefully choosing a travel insurance policy. Instead, they may unthinkingly accept whatever plan their travel agent includes with their package. This lack of scrutiny could prove costly if any mishap occurs while they are abroad.

Key parameters to check

Sum insured: The sum insured must be adequate. “If you are travelling abroad, especially to a country with higher healthcare costs, buy a higher sum insured,” says Rakesh Goyal, director, Probus Insurance Broker.

According to Vivek Chaturvedi, chief marketing officer (CMO) and head of direct sales, Digit General Insurance, “A sum insured of $50,000 might be sufficient for a four-day trip to Thailand. However, if someone is travelling to the US or Canada for four-five months, a higher sum insured of $250,000-500,000 is usually recommended to adequately protect oneself for the entire duration of the stay.”

At the same time, avoid over-insuring yourself. “You may go for a relatively lower sum insured if you are visiting a country whose medical costs and exchange rate are relatively lower,” says Naval Goel, founder and chief executive officer (CEO), PolicyX.    

Other factors that should go into determining the sum insured include the duration of the trip, your age, whether you are travelling alone or with your family, and whether your family members or you have pre-existing health conditions. Choose a higher sum insured if you are going on a long trip, and if your age is above 45.

Coverage: The plan must cover loss of luggage, flight cancellations, loss of important documents, and medical costs (including Covid-19 coverage). “If you plan to carry expensive items such as jewellery, electronics, etc., then enquire about the available add-on covers,” says Goel.

Not all travel policies cover adventure sports. Goel suggests that if you plan to indulge in such activities, you should find a plan (or one with a rider) that covers these activities. Also, consider buying coverage for emergency trip extensions and home burglary.

Exclusions: Many policies don’t cover pre-existing ailments and complications arising from them, after-effects of a recent surgery, and so on. “Ensure that your pre-existing conditions are covered by the policy even if it means paying a higher premium. Failing to do so could result in significant out-of-pocket expenses abroad,” says Goyal.

Sub-limits: Most policies come with caps or sub-limits for specific coverages. These reduce the effectiveness of the policy considerably. “Ensure that the full sum insured is usable,” says Goyal. If that is not possible, choose a policy whose limits are not overly restrictive. 

Chaturvedi suggests that in case you do not want any sub-limits on the policy, you should check with your insurer for the option to waive such limitations, even though it might come at a higher premium.

Times excess clause: One should also check if some of the coverages have any ‘time excess’ listed against them. Says Chaturvedi: “For common carrier delay or delay of checked in baggage, there could be a time excess mentioned against them, which means the claim will only kick in after exhaustion of the mentioned time period. For instance, a claim for flight delay might only be admissible if the flight is delayed by six hours or 12 hours as mentioned in your policy.” Ensure that these limits are not excessive.

Don’t end up with a lemon

Many travellers accept a plan from their travel agent without checking the parameters mentioned above. Travel agents are not insurance experts and are not well-placed to provide guidance on the right policy for you.

“Travel agents may have tie-ups with only a limited number of insurers, so you won’t get an opportunity to compare a large number of plans and prices,” says Manas Kapoor, business head-travel insurance, PolicyBazaar.

According to Goel, the policy offered by a travel agent could be basic, with a limited sum insured and many exclusions, whereas you may require a comprehensive cover.

Instead of buying from your travel agent, consider visiting the portal of a leading insurance aggregator. Compare various policies, their features and prices. These portals even allow you to customise a plan according to your requirements.

Avoid purchasing, and being charged for, add-ons that you don’t need. “An add-on cover for adventure sports is infructuous if the traveller does not intend to participate in such activities,” says Kapoor.

Some intermediaries charge their customers for providing basic assistance services such as helping with the claims process or providing emergency support. Kapoor says insurers and their distributors typically provide these services without levying any cost.

Finally, declare all pre-existing ailments with complete transparency at the time of purchase. “Failure to declare these conditions can lead to denial of claim,” says Kapoor.