Travel insurance sounds like something meant to fleece kiasee people of their hard-earned cash. Many of us pay for travel insurance before we get on that plane. But why don’t we buy travel insurance when we cross the Causeway to JB for a massage?
Heck, you’re more likely to get into an accident dodging angry drivers on the AYE or PIE than strolling the streets of Tokyo or Paris. In addition, if you have a medical insurance policy here in Singapore, you might recall your agent having told you something about being able to make claims for overseas medical costs.
For every cautious, over-insured traveller you’ll meet, you’ll find a footloose and fancy free backpacker who “doesn’t believe” in insurance. So, how necessary is travel insurance, really?
How much does it cost?
Most people don’t think twice about what goes into that plate of char kuay teow. Neither do they think about what they’re actually paying for when they buy travel insurance.
While there might be variations, most standard travel insurance policies offer coverage for the following:
- medical costs incurred overseas and upon your return, including hospital stays
- costs of evacuation and repatriation if you need to be sent back to Singapore
- compensation for travel delays or disruptions that aren’t your fault
- compensation for cancellation of your trip
- compensation for delayed luggage
- compensation for loss of personal belongings or money, including lost luggage and passports
Unfortunately, probably won’t be allowed to make claims for millions if you decide to see some celebrity doctor. Insurance companies usually impose upper limits on how much you can claim so make sure you don’t take liberties when incurring costs.
Typical limits for a basic plan are $250,000 to $500,000 for medical expenses overseas and $10,000 to $20,000 a day for hospital stays.
Travel insurance for a week-long trip to Thailand might cost about $25 to $30 for the most basic version, and rise to around $65 to $80 for the most comprehensive plan.
Can your existing health insurance policy do the job?
For many people, it’s the medical component of the travel insurance policy that they’re the most concerned about. Sure, it might be annoying to have to wait for a delayed flight or have your luggage delayed, but neither of them is going to bankrupt you.
And if you already spent one entire afternoon with your insurance agent trying to pick a medical insurance policy, why do you still need travel insurance?
If you have a medical insurance policy, it’s likely you’ll be able to make some claims for medical expenses incurred overseas. But you’ll have noticed that your existing policy contains some gaps that will end up in your having to fork out money.
If your medical insurance policy covers you only if you stay at least one night in a hospital, you might be out of luck if you have to see a doctor for emergency treatment that doesn’t warrant a hospital stay. For instance, while you might just stay home for a few days to recuperate back in Singapore, having a fever can wreck your entire holiday if you don’t see a doctor for medication.
Furthermore, while a visit to the polyclinic in Singapore might cost just $10, without the time to rely on an overburdened healthcare system overseas, you might find yourself paying top dollar for private healthcare.
If you are travelling to a remote area, falling sick or getting into an accident may mean being evacuated by helicopter or something similarly dramatic, or even flown back to Singapore. The cost of evacuation and repatriation is often not covered by traditional health insurance plans.
Basically, the crux is that there are certain things travel insurance covers that medical insurance doesn’t. And while the likelihood of these things happening is very remote, the costs can be insane.
How to cut costs
Not all travel insurance policies are created equal. This means that if you don’t want to pay too much, you can opt for a more basic plan that costs less. This means the maximum amounts you can claim in each category will be lower. You also won’t receive coverage in certain areas such as pre-existing health conditions.
Getting covered for a week long trip costs the same amount as one or two touristy souvenir tshirts. And you’ll probably look better without the tshirts anyway. But it’s important to make sure you’re getting the right coverage even if it’s for a short trip, so head on over to MoneySmart’s Travel Insurance Comparison Page for a fast and effective way to get your travel insurance needs sorted.
Do you ever travel without travel insurance? Let us know in the comments!