When not to buy travel insurance

If you have a credit card with bells and whistles, chances are it comes with free travel insurance.

Many of the gold and platinum cards that charge exorbitant annual fees offer to cover certain expenses if you get into a pickle while on holiday. The catch is that you generally have to fund an expensive chunk of your vacation with the credit card. More often than not, this is taken care of by buying your airline or cruise ticket or booking accommodation using your credit card.

There are also other requirements if you want to rely on your credit card to cover your mishaps. First, you need to notify the bank that you will be travelling and wish to activate the insurance. Failure to do so means you may not be covered.

Second, if you have a pre-existing health condition, it is wise to mention it when you activate your travel insurance and let your bank know that you will be going off on a jaunt, in case you end up paying hospital fees.

The government website MoneySmart warns travellers to check the fine print of the complimentary travel insurance offered by a credit card. Policy details will vary between  financial institutions so it is worth familiarising yourself with any exclusions.

If you have specific medical needs or want to reduce costs associated with lost luggage, theft or disrupted travel, ensure that the credit card’s travel policy covers your requirements. This is especially important if you are considering taking part in high-risk adventures, such as mountaineering, while you are away. Certain extreme activities that may land you in hospital are not covered by the free insurance.

The same is also true if you take a trip to a country the Federal Government has warned against travelling to. For more information about those locations, look up smartraveller.gov.au.

A tool called Launch My Risk was designed by the Australian and New Zealand Institute of Insurance and Finance to help people determine their risk profiles in order to assess what type of policy best suits them. Comparisons of different credit card travel policies can be found on the Canstar website.

In releasing the 2016-2017 Consular State of Play report, Foreign Minister Julie Bishop said Australians took 10.7 million trips overseas in that year. In that year, 12,000 Aussies were helped out of trouble. Among those travelling Aussies who lucked out last year, 1641 were arrested, 1090 were victims of crime, 2546 went missing, 1701 were hospitalised and 1653 died.

If you do not have a credit card with a travel insurance policy, consider buying a standalone policy.

As Ms Bishop cautioned when she released the consular report last year: “if you can’t afford travel insurance, you can’t afford to travel overseas”.

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Is credit card insurance enough

Written by Olga Galacho

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