What is the True Cost of ‘Free’ Travel Insurance Policies? Travel Insurance Tips

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When planning a trip, travel insurance is usually the last thing on most people’s minds, as no-one expects to be ending their trip in a hospital.

This may explain why, unlike health, life and automobile insurance (which most people spend a fair amount of time investigating and comparing before buying), travel insurance is often left until the last minute and bought in between checking the weather forecast at the place you’re flying to and booking a taxi to the airport.

Perhaps another reason why some people take travel insurance so lightly is because it’s pretty cheap (compared to health, life and auto insurance) or even sometimes completely free (some credit card companies offer free travel insurance to their cardholders, for example).

Also, some travel agents will offer you travel insurance as part of your ticket (for a small additional fee) when booking your trip. Saying “Yes” to this and taking out a policy at this time is extremely convenient and easy, but are these free and convenient travel insurance policies always the best ones?

Travel insuranceThe fact is that taking out free or cheap backpacking travel insurance policies isn’t always the best idea (depending on what the policy covers you for) no-matter how tempting or convenient they might seem at the time.

If your backpacking travel insurance doesn’t cover you adequately, you could end up having to pay a lot of money for hospital/medical bills at the end of your trip if something (God forbid) goes wrong.

Free travel insurance provided by credit card companies is often inadequate, so should be researched thoroughly before being relied upon. Many free travel insurance policies handed out to you won’t fully cover the cost of hospitalization (meaning you’ll have to pay the excess).

As you would expect, free travel insurance policies handed out by credit card companies often have a whole host of limitations and constraints that can limit what (and how much) they’ll pay out on.

Free insurance policies can cover small, menial costs, but any serious illness or injury that results in prolonged hospitalization, surgery or airlifting home will more than likely result in you having to pay out large amounts of money to a foreign hospital.

The reason for this is that most free travel insurance policies have a daily expenditure cap, and if that limit is exceeded you’ll be responsible for paying the rest.

For example, although a travel insurance policy may have a maximum expenditure limit of $500,000, if the daily spend limit is on $2,000 (and is exceeded), you’ll have to pay the extra costs.

These maximum expenditure limits and per-day limits vary from one policy to another, so be sure to look out for them before buying.

Of course, your credit card company will offer you the option of an upgraded policy (with improved coverage), but there will inevitably be a fee for this.

With most other (i.e. non-free) travel insurance policies, the difference in price between them is negligible, yet some policies will arbitrarily offer you a significantly higher level of coverage than others, meaning it’s important that you do a little research before setting out on your trip.

Related posts:

  1. A Complete Travel Insurance Guide
  2. What Insurance Do I Need When Hiring a Car?
  3. Budgeting for Your Trip – How Much Does it Cost to Travel the World?
  4. Travel Safety Tips – Staying Safe While You’re Abroad
  5. How to Get a Free Rental Car Upgrade

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