A List of Travel Insurance Terms You Should Know When Buying a Policy

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Whenever you go traveling abroad (whether you’re taking a gap year, a career break or whatever) it’s important that you properly protect yourself by taking out a travel insurance policy.

A good travel insurance policy will ensure that any medical costs you incur whilst traveling will be paid for by the insurance company.

Considering some hospital bills and treatments can end up costing hundreds of thousands of dollars, taking out a policy to ensure you won’t have to pay these costs is a no brainer.

One of the problems with travel insurance policies (like most insurance policies) is that they use a lot of technical insurance jargon that can be very confusing and difficult to understand.

It’s all well and good taking out a policy, but if that policy doesn’t cover you for the things you need it’s useless. Unfortunately, the things a policy covers you for (or won’t cover you for) are usually hidden in the technical jargon.

Insurance companies will also try and catch you out on technicalities to avoid paying out. For example, if you have a pre-existing medical condition, and this condition causes you to be hospitalized during your trip, the insurance company won’t pay out unless you mentioned this condition when buying the policy.

By reading our description/translation of these jargon terms below (and by keeping this ‘cheat sheet’ on hand when buying a policy) you should have no problem getting what you need.

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First Trip Payment Date — This refers to the date when you first paid for your insurance policy. It is the date the payment was sent, not the date it was cashed/processed.

Pre-existing Medical Condition Waiver — A lot of travel insurance policies will have what is known as ‘pre-existing medical exclusion’, meaning you won’t be covered if a pre-existing medical condition results in hospitalization/medical expenses during your trip. Having a pre-existing medical condition waiver means that you will be covered for pre-existing medical condition risks. To be eligible for this waiver, most insurance companies require you to “insure for the full amount of your non-refundable travel arrangements”.

Look Back Period — This refers to the number of days the insurance company will ‘look back’ from the date you purchased your insurance to see if you had a pre-existing medical condition that relates to the claim you’re making. The length of your Look Back Period varies depending on your insurance company and the kind of policy you have. Note that if you have a Pre-existing Medical Condition Waiver, you don’t need to worry about the Look Back Period (as you’ll be covered for any pre-existing medical conditions regardless).

Cancel for Any Reason — Having this clause in your policy means that you can suddenly cancel your trip up to two days before you’re set to depart and receive ‘trip cancellation protection’. Why might you cancel your trip? If there is extremely bad weather, if you have a scheduling conflict or for personal reasons.

Financial Default — This relates to your trip interruption/cancellation coverage, and protects you if your travel supplier (e.g. an airline, tour company or cruise line) goes bust and is unable to provide you with the service you paid for.

With this, remember that if you purchase your travel insurance directly through a travel supplier it is unlikely that you will be protected should that travel supplier go out of business. Because of this, it’s almost always best to purchase your travel insurance from third-parties.

Travel Agent or Tour Operator — On insurance policies they may often refer to the ‘travel agent’ and the ‘tour operator’. A travel agent is the person who books flights, cruises, tours, etc. whereas a tour operator is the person/company who organizes and operates these pre-planned vacations/trips and sells them to the public via travel agents.

Unforeseen — If something on the policy is stated as ‘unforeseen’ it means it was not expected or anticipated.

A.M. Best Ratings — Insurance companies are given a rating by industry watchdog A.M. Best. Each insurance company is assessed and rated to find out their “financial strength and ability to meet their obligations to policyholders”. A list of the best A.M. Ratings from the leading U.S. travel insurance companies of can be found here.

For more help with buying travel insurance, check out our Complete Travel Insurance Guide.


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