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Travel Insurance

Basic Plan Types

There are many types of travel insurance and choosing the right plan can be confusing. Becoming familiar with the basic types of plans and the specialized terms will make it easier to compare plans, and ultimately choose the right plan for your needs. WorldTravelCenter.com breaks down travel insurance into five major categories:

• Accidental Death & Dismemberment (AD & D)
• Trip Protection Plans
• International Medical Insurance
• Annual Medical Insurance
• Emergency Medical Evacuation

Accidental Death & Dismemberment (AD & D) insurance pays the insured or its beneficiary a substantial lump sum benefit when an accident results in death or the loss of a body part. Often people think travel insurance means flight accident insurance. Flight accident insurance is a type of AD & D that pays a benefit only when an airplane accident results in death or the loss of a body part. Common Carrier AD & D is a type of AD & D that pays a benefit only when an accident involving a common carrier results in death or the loss of a body part. Finally, the broadest type of AD & D is 24-Hour AD & D which pays a benefit when any accident results in death or the loss of a body part so long as the accident occurs during a covered trip.

Accidents due to terrorism may or may not be covered depending on the policy. Acts of war, and nuclear, chemical, and biological attacks are usually excluded, but policies that waive the exclusions can be purchased at a considerable cost.

Trip Protection Plans typically reimburse your non-reimbursed travel expenses if an emergency (death, sickness, airline strike, travel company bankruptcy, etc.) occurs right before or during your trip causing it to be canceled, interrupted or delayed. Often these plans include travel assistance services, coverage for lost or damaged baggage, as well as minimal coverage for incurred medical expenses. Although the maximum benefit limits for medical expenses may be relatively low, often there is no deductible or co-pay. Usually travel protection plans are sold on a per-trip or single-trip basis but some plans can be purchased on an annual multi-trip. Annual multi-trip travel protection plans offer all of the benefits of single-trip protection plans except annual multi-trip plans almost never cover trip cancellation.

Travel protection plans offer good protection for international and domestic travel when your trip cost is substantial. The medical expenses coverage can save Americans money when illness or injury occurs while traveling within the US, especially when your primary health insurance coverage is an HMO or PPO. Travel protection plans cover increased "out-of-pocket" expenses that result from higher co-pays and deductibles because you're "out-of-network."

International Medical Insurance is medical insurance designed to reimburse you for medical expenses incurred when you are traveling or living in a foreign country for two weeks to two years. Maximum policy coverage levels can be substantial enough (more than US$1 million if desired) to cover major medical expenses such as emergency surgery and extended hospital stays. The "American-style" of international medical insurance coverage is subject to the specified deductible (excess in the UK) and co-insurance or co-pay. Plans may include emergency evacuation, reunion, and repatriation benefits, as well as AD & D and travel assistance services. The plans allow you to choose the maximum policy coverage level and deductible, which affects the premiums, giving you more control over costs than is the case with travel protection plans. Some plans are renewable up to a maximum of 24 consecutive months.

Whereas travel protection plans are often limited to residents of the US or Canada, international medical insurance is available to all nationalities traveling worldwide. Coverage is guaranteed without underwriting, which means all applicants who have paid premiums are automatically covered regardless of medical history. No medical questions are asked. Pre-existing conditions are generally excluded.

Annual Medical Insurance is annually renewable international medical insurance with higher maximum policy coverage levels (up to US$5 million) and more comprehensive types of coverage (life insurance, higher limits of AD & D, and daily indemnity for hospitalization can be added to coverage for additional premiums). Coverage is appropriate for individual expatriates and their families, as well as employees working abroad, international organizations, missionaries, and others who want annually renewable major medical insurance to serve as their primary medical insurance. Coverage is available to all nationalities living outside their country of citizenship (or home country depending on the plan). Some plans will cover you in your home country as well as everywhere else in the world. Medical questions are asked and may result in applicant being subject to underwriting in which case a policy may or may not be issued depending on the judgment of the underwriter. Pre-existing conditions may be covered up to a maximum limit that is a fraction of the policy maximum.

Emergency Medical Evacuation protection covers the cost of a transporting a seriously injured or ill person to an adequate medical facility, a hospital near home, or the hospital of their choice, depending on the plan. This coverage is usually included with both international medical insurance and travel protection plans, but unlike baggage insurance and trip cancellation insurance, it is also sold separately. Emergency medical evacuations are always expensive and sufficient coverage is recommended, especially for long-distance trips.

Copyright © 2007 Senior Market Sales, Inc. Used With Permission.