‘Free’ Credit Card Insurance
The so-called ‘free’ travel insurance that comes with some credit cards may seem like a great deal but there can be some expensive drawbacks:
- High excess – The excess on the policy can be higher than usual.
- Limited cover – The level of cover and benefits offered can be quite limited.
- Must be activated – The flights, accommodation, personal effects and other holiday costs must be purchased using the credit card to ‘activate’ the cover.
- Limited medical benefits – May not cover any pre-existing medical conditions.
Example:
Policy A comes with the credit card, it has a $250 excess.
Policy B is a tailored policy for the trip, it has an excess of $0 and costs $128.
If a claim is made for $600, policy A will pay $350 whereas policy B will pay the full $600. Even after subtracting the cost of policy B you’re $122 better off.
Aside from the actual cost of the policy itself, it also comes down to the travel insurer as well.
Consider:
- Who would you be comfortable to rely on for emergency assistance while travelling overseas?
- Would you trust your credit card provider to give you the right advice and assistance in a medical emergency?
- Who do you believe would act in your best interest when it came to paying out any insurance claims?
Always read the Product Disclosure Statement (PDS) for your 'Free' Credit Card travel insurance and if in doubt, consider a specialist travel insurance policy which could be the better option for you.
Shopping for travel insurance on price
Different policies will have different inclusions and exclusions so it’s important to compare travel insurance benefits when shopping around, not just the prices.
Remember to consider all the factors, as buying on price alone could leave you with inadequate cover and a nasty bill later down the track. It’s important to make sure that your travel insurance has the features and benefits that are suited to the type of holiday that you’ll be taking.
Free credit card travel insurance may have some or all of the following limitations:
- Higher excess
- Age limits
- Spouses and dependents are not covered
- Limited or no cancellation fees cover
- Limited or no luggage and personal effects cover
- Limited overseas medical cover
- Limited hospital expenses cover
- Limited or no emergency medical assistance
- Limited or no cover for travel documents, credit cards or theft of cash
- Limited or no cover for adventure activities or winter sports
- No cover for any pre-existing medical conditions
- No specified item cover available for expensive items
- No cover for some regions or domestic travel within Australia
Remember to always double check the Product Disclosure Statement (PDS) or ask your travel insurer before you purchase a policy.
24 Hour Worldwide Emergency Assistance
Having access to a 24 hour Worldwide Emergency Assistance is a vital inclusion of a good travel insurance policy.
It provides an emergency point of contact to coordinate your overseas medical care and provide assistance and travel advice. This could be as simple as directing you to an English-speaking hospital or GP, providing a guarantee for emergency medical expenses, or even organising emergency medical evacuation back to Australia.
If you’re unsure, ask the following questions:
- Does the policy offer overseas emergency medical assistance?
- Is help available 24 hours a day, 7 days a week, 365 days a year?
- Is the company offering the assistance as part of a global network?
- What limits, if any are placed on the assistance?
Providing this service can be costly, so you should always double check with your travel insurer and bank to see if this is included and if there are any restrictions.
Cancellation Cover
Cancellation Cover allows you to claim back the cost of lost deposits, pre-paid airfares and accommodation if you have to cancel or postpone your trip unexpectedly.
This may be limited or not automatically covered under a free credit card travel insurance policy.
Things to look out for:
- The cancellation cover may be limited to a short time period immediately before your departure date.
- The cancellation cover may only be valid for a small number of specific reasons.
- Some costs may be excluded from cancellation cover.
- It may not cover cancellation expenses if you are already overseas and have to return home unexpectedly.
Check for any limits or restrictions on cancellation cover in your insurance provider's PDS.
Checklist of questions to help you compare insurance options
These are some of the most frequently asked questions travel insurers receive, and can be used as a general checklist when comparing cheap travel insurance policies.
- How much is the excess?
- Is there an excess waiver option?
- Does the policy provide unlimited cover for emergency medical expenses?
- Does the policy provide cover for the region(s) you’re travelling to?
- Does the policy provide adequate cover for cancellation fees and lost deposits?
- Is the policy backed by a worldwide emergency assistance network that’s available 24 hours a day?
- Are all the sports and activities you want to do covered by the policy?
- Is there enough cover for the luggage and personal effects you’re taking?
- Does the policy also automatically cover accidental death, permanent disability and personal liability insurance?
- Is the policy underwritten by a strong reputable underwriter?
The bottom line is that just taking the cheapest policy is not always going to save you money, in some cases it could actually cost you a significant amount more in the long run. Remember to always read your travel Product Disclosure Statement (PDS) to make sure that the travel insurance policy you’re considering will provide the cover that you require.
Ask questions when you buy your policy and remember: ‘free’ isn’t always free and if something seems too good to be true, it probably is.
