Unintended Results When Buying Airline Travel Insurance

Most airlines will sell travel insurance when a traveler buys an airline ticket.  Their coverage is usually priced low to encourage an impulse purchase.  So why do you want to just say no and find coverage elsewhere?  Here are two good reasons:

 1.  Limited coverage:  How do they get the price so low?  Easy, pure insurance pricing is a function of how much do they pay(average claim payment) and how often do they pay(frequency).  When you see a very low price for travel insurance when compared to other plans, than the average claim payment and/or frequency is lower(Some other factors might come into play but that’s another story).  Coverage through an airline usually provides much lower benefits coupled with more exclusions which means a lower frequency because there are fewer claims being paid.  Consider the case of a friend of mine who recently purchased coverage when he bought his airline tickets for a trip to Florida.  Currently he’s in the hospital in Florida and might be in the need of a medical evacuation back to Connecticut however, the airline insurance plan he purchased doesn’t include  either medical evacuation or medical expense coverage.

 2. Complications with other insurance plans:  We are getting more and more client’s asking to insure tours or cruises where they have booked their airfare separately and purchased coverage from the airlines.  To them it’s unreasonable to insure the airfare since they already have however, many travel insurance companies require the traveler to include that cost when calculating their trip cost in order to be eligible for the “waiver of pre-existing” conditions.  Failure to include the already covered airfare may cause them to lose their pre-existing coverage eligibility.  The same situation happens when travelers buy tour coverage from the operator and then add a pre or post trip to their itinerary.  Operator plans very rarely offer the flexibility to cover any pre or post travel so travelers will seek other coverage which exposes them to the same possibility of losing their eligibility for pre-existing coverage.

Because of these factors we strongly recommend that travelers with multiple faceted trips avoid operator offered travel plans and rather shop around and talk to a travel insurance professional to find the plan that is right for them.

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