Travel Insurance Myths

Today I was reading a thread on a travel bulletin board that had several well meaning but incorrect statements about travel insurance. Here is the reply that I posted – you might find it informational:

There are a lot of misconceptions about travel insurance:

1. All plans are secondary. Incorrect. Most plans are secondary however, Travelex offers primary plans; Travel Guard with their Platinum plan is primary; and Travel Insured allows you to upgrade their medical coverage to primary through an additional fee.

2. Failure to insure to value invalidates coverage. Incorrect. What it might invalidate is the “waiver of pre-existing conditions” and/or “cancel for any reason” coverage. Some plans require that you insure to the full pre-paid value while other plans say that you have to insure to the full pre-paid value of arrangements that are non-refundable. Don’t let the last portion fool you – you still have to insure to the full value of the arrangement and not just the non-refundable portion. An example; a travel arrangement of $2,000 that has a 50% cancellation charge. You must insure for the full $2,000. Also never round your trip cost down. That might invalidate your eligibility for the “waiver” and for “cancel for any reason”.

3. All travel insurance requires that you pay up front. Incorrect. Even most policies that are “indemnification” plans have an Emergency Assistance benefit where they will make emergency payments to hospitals if required in order to secure you service.

4. None of the travel policies will evacuate you to a hospital of your choice. Incorrect. Several plans will. Remember evacuations are usually in 2 phases; the initial emergency phase to get the person stabilized and then the repatriation phase. Here is wording directly out of a Travel Insured plan: …to Your return destination or the Hospital of Your choice if medically necessary and authorized by the Assistance Company…

5. Travel Insurance companies have ratings. Incorrect. Travel Insurance companies are not rated. What is rated is the underlying insurance company that underwrites the plan. Ratings are usually by a firm called AM Best and indicate the financial strength and claims paying ability of the insurance company.

6. No difference between primary or secondary plans in how long it takes to pay a claim. Incorrect. Secondary plans require that you submit claims to your primary company prior to submitting to them. That can add several days to the time it takes. One of the biggest time delays is whether a medical claim is pre-existing or not. If possible always buy a plan with a pre-existing conditions waiver. Also, make sure you meet all of the requirements for the waiver. Generally there are 3; 1. that you buy the insurance within the required time period (usually 2 weeks), 2. that you insure to value, and 3. that you are physically able to travel on the day you buy the insurance.

As an end note for those that qualify for Medicare remember that they don’t cover you outside the USA. Some of the supplemental plans (MediGap) do however, those plans have lifetime limits with large co-pays. Because of the lifetime limits it makes sense to buy a plan with a primary medical coverage rather than a secondary plan. With the primary coverage you won’t have to use the lifetime benefit unless the amount of the claim exceeds what the limit is on the travel insurance thus saving your lifetime benefit for when you really need it.

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