Is flight accident insurance really life insurance? From time to time that question comes up. Usually it comes from a traveler who is not in the insurance business and who makes the assumption that because the flight accident insurance pays a benefit based on the death of the insured that it’s a form of Life insurance. Every once in awhile it comes from a source that should know better.

The answer is no, flight accident insurance is not Life Insurance! It’s a form of accident insurance that will pay a lump sum benefit (principal sum) to a beneficiary in the event that the insured dies as a direct result of an accident that causes bodily injury while they are riding as a passenger, or boarding or alighting from an licensed, scheduled airline.

While Life insurance will do the same thing it is much broader that Flight accident. It will pay a benefit - the amount insured - to a beneficiary in the event of the insureds death, even if the death were due to a heart attack. The death does not have to be caused by an accident in order for coverage to apply.

Isn’t it all the same thing? No, insurance is a highly regulated form of commerce and there is a distinct difference between the two types of insurance. As a matter of fact the various State Insurance Departments that regulate insurance even require different licenses to sell them; travel accident for the flight insurance and life insurance for the life insurance. States can be very sensitive about the difference and in some cases will hold agents in violation of advertising laws if they call flight insurance, life insurance. This writer knows of several cases where agents were required to pay fines for violating State advertising laws because they made the mistake of calling it Life Insurance.

So is Flight Insurance, Life Insurance? NO!

Flight delays and cancellations are in the news right now because of the safety inspections that are being required by the FAA. Questions are being raised as to whether or not there is coverage under travel insurance policies for trips that are being affected.

It really depends on the company and plan that a person has chosen. There are possibly several areas that might offer some coverage;

• Trip Cancellation: this type of coverage involves canceling a trip due to a “covered reason” and provides reimbursement for the non-refundable fees if you have to cancel your tip because of the covered reason. In the insurance industry we call this type of coverage “named peril” because the “peril” has to be named by the insurance company within the policy for the cancellation to be covered. These “perils” are very specific and most trip cancellation coverages would not cover the cancelled flights by AA. Only one company provides for “mechanical” delays of an airline that cause your to miss your flights.
• Trip Interruption: this is almost identical coverage to trip cancellation except you’re already on your trip and a “covered reason” occurs that causes you to interrupt your trip and return home at a time that is unscheduled. This coverage usually pays for the non-refundable, unused portion of your trip and up to the economy airfare to return home. The perils for this coverage are, for most plans, the same as trip cancellation. There are two companies that provide coverage for “mechanical” delays of an airline.
• 
  Missed connection: a few of the plans offer this benefit. It’s designed to provide a modest benefit if there is a delay of more than a couple of hours by the airline in getting you to a connection. It usually provides for additional transportation to get caught up to your trip and additional living expenses. The benefit is usually limited to a maximum amount with some plans offering $500. in total.
• Travel delay: this is a common benefit found in most plans and will pay if a client is already on their trip and there is a common carrier delay of more than X hours (varies from 5 to 12 hours depending on the plan). It provides for additional living expenses while the traveler is delayed and is limited to a per day maximum and a policy maximum. As an example some policies will provide for $150 per person per day for a maximum of $750.

Of the 4 benefits that I’ve listed the most common ones are the missed connection and the travel delay. Statistically, I would think that more people would be impacted who were already on their trip than those just leaving. You should also look at the plan exclusions as some plans that might appear to have coverage might exclude any flight cancellation or delay that is caused by a government action. As always make sure you read the policy provision carefully before you decide which coverage is best for you.

A special thanks to J. G. Batterson, founder of The Travelers Insurance Company, for introducing travel insurance into the United States 144 years ago today!

On April 1, 1864, Mr. Batterson with several other prominent Hartford, CT businessmen established The Travelers Insurance Company with the stated purpose to insure people while traveling, hence the name The Travelers Insurance Company. I doubt that Mr. Batterson would recognize the industry today. From the beginning in 1864 to the mid-1960’s travel insurance was primarily sold through railroad ticket agents. Beginning in the 1940’s and accelerating throughout the 1960’s and 70’s the distribution of travel insurance began to sift to travel agents and tour operators where today they account for the majority of sales. However, beginning in 2001 the internet began to change travel and how travel insurance is sold. Today, travelers can use the power of the internet to compare travel insurance and to find the plan that is best for their specific trip.

Winter’s nearly over and Spring’s almost  here.  Time to think about Travel and Travel Insurance.

                 And travel insurance.  It’s been a long winter in our part of the woods and I can’t wait for the warmer days to get here.  My wife and I planned a trip up to Maine for a week this coming July and I imagine that there are many of you out there planning on taking trips yourselves.  Here is just a look at how I am going to go about getting insurance for our trip.                            

                    The cost of our cabin isn’t that much, under $1,000 for the both of us for the week.  I’m not too concerned with medical expenses since our medical still covers us while we’re away.  Mostly I am concerned with trip cancellation/ trip interruption.  We have a baby that’s due in a few days and by the time we are able to travel, the little one should be three months old or so.  I’m mostly worried of something happening with my child that would prevent my wife and I going on the trip.   

                I stated earlier that Medical and Evacuation coverage aren’t that important to me, so with that in mind, I can start looking at the cheapest Comprehensive Plans since all of them are going to be offering the coverage that I want.  For my family, I decided that the cheapest plan had what we were looking for.  If your interested, it was the Access America Family Basics plan for $52.00.               

                Now, if I were taking a rental in say Florida, I may be more concerned with coverage for the  destination being made uninhabitable by bad weather in addition to making sure we could go if any of us got sick.  For out trip though, the plan I mentioned above would be just fine. 

                When you’re looking for insurance, think of what you need to get covered for and then take a look at the plans.  More often than not, you can find the insurance that would suit you best without breaking the bank.

When was the first Flight Accidental Death policy (then known as Aero Trip Ticket policy) sold? And who purchased the first policy?

Good questions that probably would have been lost to history if not for “The Travelers 100 Years” published in 1964 to commemorate their centennial anniversary.

The answer:

President W. Wilson of Washington, DC.

Sold: 9:00 AM on May 6, 1919 in Atlantic City, New Jersey.

But the story doesn’t end there. Also buying policies on the same day were;

Admiral Robert E. Peary, discoverer of the North Pole;
Orville Wright, of first flight fame;
Newton Baker, Secretary of War;
Josephus Daniels, Secretary of the Navy; and
Willaim Redfield, Secretary of Commerce

Not bad for the first day of sales almost 89 years ago!