Personal Finance

Some Singaporeans have gone off the idea of travel insurance. While it used to be considered an absolute necessity, more travellers now think of it as an unnecessary waste of S$50 to S$100.

This is particularly true of those who go on short trips, to whom travel insurance becomes a significant expense. But are they doing the right thing?

Why No Travel Insurance?

The most common reasons are:

• They have personal accident insurance
• They feel the claims process is unrealistic and restrictive
• The seek cost-efficiency
• They are already covered by credit card
• They are covered under their employer’s insurance
• They Have Personal Accident Insurance

For some travellers, their main concern is their healthcare related. They do not want to face medical expenses if they suffer from a fall, get hit by a car, etc.

They are less concerned about the other things that travel insurance covers. These are things like lost jewellery (they may not be carrying anything valuable), flight delays (not an issue if they have airline memberships that already compensate them), or tour agency issues (they may not be on a package tour).

For those travelling to countries where they have friends or family, some of the emergency assistance from travel insurance may be irrelevant. For example, if you are travelling to stay with your uncle in Canada for a few days, it may not be a big deal if your luggage is diverted for a day or two. The inconvenience may not be worth a S$100 insurance policy.

(It might be a different story if you are travelling alone, and know nobody where you’re going).

These travellers typically add personal accident coverage to their existing insurance policies, in the form of a rider. This can give them comprehensive protection wherever they are, for a fairly low cost (e.g. under S$30 a month).

If they are going skiing, for example, they may be happy to rely on their personal accident coverage, without adding travel insurance.

2. They Don’t Want to Go Through the Claims Process

Some seasoned travellers are intimately aware of travel insurance terms, and are dissatisfied with them.

For example, many policies do not allow you to make claims for lost jewellery. For lost cash, the maximum claimable amount might be too small to be relevant (e.g. The maximum claimable amount is S$250 regardless of how much you lose, and then insurance policy alone is already over S$100).

There are often tight limits on maximum claim amounts, on a per item basis. Even if the policy insures you for you to S$1 million, for example, the maximum claimable amount on your broken iPad may only be S$500.

Some travellers also feel the claims process is unrealistic, or too convoluted. For example, you may be required to present original receipts if you want to make a claim for your broken laptop.

With regard to trip cancellations, some policies only pay out only under specific conditions. For example, a policy may not pay out if the cause of the cancelled trip is the Singapore haze or a strike (the trip may only be insured against poor weather).

As such, a subset of travellers believe travel insurance has too many restrictions to be useful. If you want to join their ranks though, you will have to be sure that you make up for lack of travel insurance with the right safety precautions, and the right personal insurance policies.

3. They Seek Cost-Efficiency

As a rule of thumb, it is not cost-effective to insure expenses you can pay out of pocket.

For example, it would not make sense to pay premiums to insure your socks, or to insure cheap canned food in your kitchen pantry – the odds of losing them are so low, and the cost of replacement so cheap, that the premiums would just be a waste of money.

The same theory can be expanded to things like second-hand laptops, cheap watches, old clothes in your bag, etc. Some travellers would feel no significant pain from losing these items, and prefer to have more cash on hand for shopping or better accommodations. Should they lose the items, they have more than sufficient money to replace them immediately.

(Note: if your worry is losing your luggage and having no clothes, toiletries, etc., you should note that most airlines provide supplies or funds for passengers whose luggage they lose).

4. Their Credit Card Offers Free Travel Insurance

Many air miles credit cards, such as the Citi PremierMiles Visa Card, come with complimentary travel insurance if you charge your travel tickets to it. The Citi PremierMiles Visa Card covers up to S$1,000,000 in case of death or permanent disablement from accident in a common carrier, up to S$40,000 for medical expenses during a trip, and travel inconvenience.

If you are satisfied with these, there’s no need to buy more travel insurance.

5. They are Covered by Their Employer’s Insurance

Many people overlook this, so make sure you don’t.

If you are flying abroad for business, check with Human Resources on whether you are covered under your employer’s insurance. If there already is one, you do not need to buy your own.

Some companies have generous corporate insurance plans, that will cover you even if you are not on official business. If so, all you need to do is familiarise yourself with the terms (and get private only if you are unsatisfied).  

 

(This article is brought to you by Singsaver.com.sg)

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