Travel Insurance: Insure against the unexpected
When we are in our home towns, or our own countries, we are used to the ways of life in these places. These are where most of us grew up, live, and carry on our daily activities with ease as we are accustomed to the surroundings, social norms, communal behaviours, etc. But, when we are in foreign places, everything around us becomes alien.
Living in safe — or perceived "safe" — environments can make us overly complacent and give us a false sense of safety when we go travelling. We tend not to expect any bad things to happen to us in that short joyous occasion when we are abroad. Well, usually no bad thing is expected to happen, except only in unforeseen circumstances — when you least expected it.
What can the "bad things" be? Many. In worst cases, deaths or disabilities due to accidents, or unforeseen natural disasters, or serious injuries requiring long and expensive medical treatments. Milder cases can be trip cancellations, lost or damages to personal properties, etc. In almost all of these examples, there are usually financial losses or expenses that we, including you, are not expecting to incur before embarking on the trips. And this is where travel insurance comes in.
A hike up 4095-metre Mount Kinabalu, Sabah, East Malaysia, in September 2008. Most travel insurance does not cover hazardous activities such as mountain-climbing and deep-sea diving. We had to get separate insurance from the Kinabalu Park Office. In June 2015, a 6.0-magnitude earthquake hit Borneo and 18 lives were lost on Mount Kinabalu from falling rocks on the trail. Mishap do happen anytime, anywhere.
The objective of a travel insurance is to cover unexpected expenses that may be incurred by you or your family members due to unforeseen circumstances while travelling. Though it cannot prevent mishaps from happening to you or prevent lost or damages to your belongings, it can insure against the costs (or part of it) that are incurred as a result.
Disclaimer: All points mentioned in this article are subjected to the coverage and terms & conditions of the insurance policy you may be getting.
Typical Travel Insurance
What does a typical travel insurance covers?
Trip cancellation due to unforeseen circumstances
Lost of travel documents, lost baggage, delayed baggage, flight delays, etc.
Lost or damage to personal belongings
Emergency medical coverage, with evacuation to a hospital or repatriation of remains
Accidental death & permanent disabilities
What are some additional benefits, that are usually not typical to most travel insurance, but can be included for higher premiums?
Hazardous sports or activities
Rental vehicle collision
Home protection (when your whole family is away)
What are not covered?
Pre-existing medical conditions
Medical treatments for intentional acts of risk-taking with no regards to own safety
Death or permanent disabilities due to suicide
Financial losses as a result of unlawful activities, such as fines
Compensations to another party due to wrongful acts
Any other exclusions stated in the policy
Note that no insurance policy can cover everything — if there is, it will be so costly that travellers will rather take risks than getting them. Also, additional benefits may increase the cost of insurance, so get only what you may need to put your mind at ease. If in doubt, consult a financial adviser to custom-make a travel insurance plan for you.
In general, travel insurance allows you to claim on expenses due to trip cancellation, lost or damages of personal belongings, and also medical attention as a result of some misadventures when travelling. In the event that you met with accident when abroad and passed away, the insured amount can assist your family members to tide over any unexpected financial losses.
There are limits on how much you can claim for each type of coverage depending on the travel insurance you have. Policies with higher claim limits will naturally cost more. However, the cheapest policy may not be able to provide you with sufficient coverage. So, do evaluate what you may need and get adequate coverage.
For example, you are bringing your brand-new photography gears of US$2,000 (current value) on a trip and you get a travel insurance that covers up to US$500 for lost or damages to personal belongings. In the event that your gears got stolen or damaged due to an accident, the maximum amount you may be able to claim will be US$500. Therefore, you may want to consider a policy with higher coverage or take up a separate insurance on these gears, but it will cost more on top of the travel insurance.
Lost or damages to personal belongings are not really big matters unless you are bringing really expensive items abroad. The most expensive expense that could be incurred on a trip is probably the medical evacuation cost to bring you to a hospital or the repatriation cost (if you passed away on foreign land), or maybe both in the worst case.
The costs of specialised services can be in the range of US$25,000 to US$250,000 (or above) depending on where you are — you may not need these if you are travelling to a neighboring country that are well served by roads.
When NOT to Get Travel Insurance?
1. If you are cash-rich and can leave behind sufficient money for sustenance for your family. Note that non-cash assets are not considered as cash as they cannot be liquidated for cash within a short period of time by your family members. In most cases, they may be part of your estates and subjected to estate laws and taxes.
2. If you are not rich but willing to absorb any financial losses, damages or losses of expensive gears, treatment costs, etc., should anything happens to you. Your family members must also be willing to fork out the money to help cover your losses.
3. You have health insurance that can cover your medical costs internationally and with additional evacuation benefits (i.e. the evacuation benefit should not reduce the payout limits of the health insurance for further medical treatment). In most cases, only people who travel frequently to many places in short period of time will get international health insurance, which are costly too.
4. You have term-life insurance with adequate sustenance for your family should you passed away. And the insurance payout is sufficient to cover any expatriation cost (because this is extra from your last travel) and still have enough to provide for your family.
5. When you know you are heading into potential dangers, ignoring travel warnings that had been issued for known terror plots, known natural disasters that are about to take place, or seeking medical treatment abroad, etc. Even if you do manage to get a travel insurance, claims due to known risks may not be covered by the insurer.
To sum it up, take up travel insurance to have financial protection against unexpected expenses when you are travelling and without adding unnecessary financial burdens on your family members should you have a mishap.
To add some convincing points, here are some mishaps that happened in recent years:
19 Jul 2016 - Taiwan tourist bus fire kills all 26 on board
14 Jul 2016 - Nice, France, terror attack on Bastille Day
5 Jun 2015 - Borneo earthquake death toll rises to 13
A year after the 2008 Great Sichuan Earthquake, evidence of the natural disaster were still visible in Wenchuan, China.
There are many more tragedies around the world but these are clearly travel-related. Nobody will be able to know when the next one will occur. So, do take note of travel alerts and look up travel safety related articles prior to your trips.
And be insured against the unexpected!
This may not be covered by travel insurance： Hidden Risks Behind No-Entry Signs