If you’re a frequent flyer and make most of your bookings online, you should be familiar with how most airlines offer travel insurance from their partner companies while you make your booking. It’s kind of like “would you like fries with that?” of the online travel booking world. The only difference is most people buy the fries.
Let’s face it, travel insurance for Pakistanis is more of an “I’m not buying if my visa application does not require it” situation. Some countries, most popularly the Schengen states, require you to have travel insurance for at least the duration of your trip. With most other countries though, you have a choice. There are so many insurance products out there, it’s hard to determine which one is actually worth it. At the end of the day, like most insurance products, most people lose money buying travel insurance too. What are the odds of you facing a medical emergency or a natural disaster on your vacation? Pretty low. But for some people, it’s worth paying for the peace of mind. Most people I know have never bought travel insurance in their lives because their instincts tell them it’s unnecessary. Instinct is a poor way to make decisions about insurance though. You should consider where you are going, how long you are going for and what kind of activities you intend on indulging in on your vacation.
The good thing about travel insurance is that there are no monthly instalments and you simply pay a one-time fee. You can get travel insurance to cover you from one week all the way to the maximum of one year. The costs will depend on the duration of the insurance policy, your age, your destination(s) and the type of coverage provided. For example, travel insurance to the Schengen states for one week would cost me (a 26-year-old) anywhere between Rs 1,500 to Rs 3,000. The same policies would cost me between Rs 15,000 to around Rs 28,000 for the entire year. Policies can also be bought for entire families which would cost more but would be a more economical decision instead of buying individual policies separately. A “family” (typically parents and up to four children) is defined differently by different insurance providers so be sure to confirm with them before buying!
There are a few key components of travel insurance which you should look out for such as medical expenses, permanent disability, death, loss of check-in baggage and flight delays, etc. The insurance company sets a maximum claim limit on each of these events which you should keep in mind before buying. Certain events such as delay of departure might also be excluded from a policy. Those who do buy travel insurance or require you to buy travel insurance (Schengen countries) do so primarily for medical coverage and that is what the bulk of the claim limit will be assigned to. Now you might think the chances of you going through a medical emergency on your two week long trip to South East Asia are pretty small. Think again. Is it really worth taking the risk? A friend of mine was travelling through Cambodia a couple of years ago, insurance-less of course, when out of nowhere he faced appendicitis! In a remote part of a country where English is not commonly spoken, he faced an unbelievably difficult time. When he was finally taken to the hospital and had surgery to remove his appendix, he was slapped with a bill that dented his budget for the rest of the trip. And Cambodia is one of the cheaper places around. If something like this were to happen in the USA, you would sure regret not buying travel insurance. It is important to note that if you have travel insurance that covers such medical expenses, you are still required to pay for the expenses yourself and submit a claim once you reach your home country. Insurance companies may also have deductible or copayment clauses whereby they would only cover a certain amount, for example, 90% of the expenses, leaving the rest to you.
The argument against travel insurance also says that you might be buying something you already have. If all you are after is medical insurance, this might already be covered in a life or health insurance policy – in case it covers you globally. Are you worried about losing your belongings while travelling? This might be covered if you are a home insurance policyholder. Some credit cards even allow you to ensure valuable products like a laptop or mobile phone that you purchase using them.
Yes, most people lose money buying any kind of insurance. But you must ask yourself what value you put to having that sense of security? At the end of the day, most travel insurance policies covering just the duration of the trip will add around 5 to 7% to the cost of your total trip. I would not say it’s a must-buy – it would depend on your circumstances. If you plan on travelling to the same region more than once a year, you should seriously consider it. We should all strive to be rational economic beings and therefore keep asking ourselves these logical questions. Are you going to a beach resort for a laid-back holiday with family? Or are you going backpacking through South America with your friends, planning on taking part in physical excursions like bungee jumping, etc? It does not take a lot of thought to determine which situation demands travel insurance more than the other. It is always better to be safe than sorry.