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Buying travel insurance? How to minimise hassles

There is no greater education than travel, said a wise man. Well said, but this education doesn't come cheap. Soaring airfares and public transport costs, increasing visa fees, rising hotel tariffs make international travel no cakewalk. Add to that any emergencies that might crop up abroad and there could be a hole in your pocket big enough for a huge chunk of your savings to fall through.

This is where travel insurance can minimise the pain. From lost and delayed baggage to hospitalisation to loss of passport, missed flights and other emergencies, travel insurance covers a number of mishaps that may mar your trip abroad.

However, you must choose a travel insurance package carefully because that is what will determine how soft the blow of an emergency will be when you're abroad. Here are five things to remember when choosing a travel insurance plan.

The author is co-founder and director of Bangalore-based Perfios Software Solutions Private Limited. www.perfios.com is a personal finance software solution that provides a 360-degree view of your personal finance, with very little manual intervention.

Purpose of travel

Yes, there are different kinds of travel plans for different purpose of travel. It also matters whether you are going alone or with family, for business or leisure, as a student or a tourist and so on.

Individual travel insurance is for the once-in-a-blue-moon traveller, who could be a tourist or going on a one-off trip to visit family, friends, business associates or anyone else. This one is best for infrequent travel.

Family travel insurance works well for the close-knit Indian family. If you have decided to treat your family-- which insurers only count as your spouse and two kids with room for one more kid -- to an international holiday after much nagging, go for the family cover.

Annual multi trip insurance is for the high-flying executive who has lunch in Paris and dinner in Milan. This one works well for the frequent flyer as it is valid for one year and can be renewed periodically.

Student travel insurance is what students who want to add foreign degrees to their CVs should go for. This kind of insurance, meant for students studying abroad, comes with benefits such as sponsor protection, bail bond and others. The validity of such plans is one or two years and it can be renewed regularly.

Senior citizen travel insurance is for those above the age of 70 years. Seniors require much more care than younger travellers do. Their chances of health emergencies are higher and this plan is customised to suit their needs. Most insurers offer this type of coverage for people aged 70-80 years.

Some, however, even offer plans for ages up to 85 years, subject to the overall health and fitness levels of the insured.

Place of travel

Where your wanderlust takes you also matters, mainly upon the cost of living in different countries varies. If you're heading out to Uncle Sam, a.k.a. United States of America, or even Canada do remember to go for a higher sum insured because health facilities in these places don't come cheap.

Healthcare cost is probably the highest in the world in the US and Canada.

If you're travelling to Europe, Asia or any other part of the globe, it's alright to opt for a lower sum insured. Travel insurance is broken up into three categories depending on the destination -- 'USA and Canada', 'Excluding USA and Canada' and for 'Asian region'. The premiums for US and Canada are the highest and for Asia, perhaps the lowest. Choose well.

Deductible

Deductible', also called 'excess', is the amount that an insurance company lops off from your claim while settling it.

For example, if your plan has a $100 deductible, the first $100 of any expenses incurred by you will have to be paid from your own pocket. Any amount to be claimed over that will be settled by the insurance company subject to the sum insured.

Wherever there is a choice, the higher the deductible, the lower the premium you will have to pay but the lesser the claim you will get.

So take your pick. Would you prefer lower premium or a higher amount of claim should anything happen. Most insurers have $100 deductible but some also offer you $50 deductible.

Assistance service provider

An assistance service provider is the one that determines your experience in a foreign land in case of an emergency.

Should something happen, it is this assistance service provider who will guide you in a foreign country and provide you all the on-ground assistance you need. Insurance companies tie up with assistance service providers to offer their clients support in distant lands.

Every travel insurance policy you buy comes with a number to be called during an emergency. This is the assistance service provider's number, which is operational 24/7, all days of the year, and will be your friend, philosopher and guide in that country.

While buying insurance, don't forget to do some research on the assistance service provider and its network. The better the network coverage and stronger its global infrastructure the higher your chances of getting good service.

Some insurers tie up with small local assistance service providers in different countries. There are chances their services may not be as good. Also check if the assistance service provider has the capability to give you cashless hospitalisation globally should you need it. Ask your insurers these questions before signing on the dotted line.

The fine print

Time is not always a luxury we enjoy. However, it is still very important to read what is covered in your travel insurance policy and what is not. This will help you avoid nasty surprises later on.

Cruise

Many insurers do not cover emergencies during cruises. So if you are planning to romance the waters, make sure your plan does give you protection.

Baggage delay and loss

If you lose your baggage to and from your destination, you will be able to claim the losses. However, baggage delay is another ballgame altogether.

Strangely, insurers cover you for baggage delays of more than 12 hours during outward journey but don't extend the same benefit for inbound travel. So if your baggage was delayed by over 12 hours on your return to India, forget about getting any cover for expenses incurred. Also, the benefit is only reimbursement on any expenses you incurred due to the baggage delay. You will have to keep the original receipts safe to claim the reimbursement.

Pregnancy

Most insurers do not cover pregnancy at all. Some, however, do cover it for up to five months or 30 weeks of conception. That too only for emergency medical treatment required due to acute complications that could threaten the life of the mother and/or the unborn child. So do get the facts right before buying insurance for a pregnant woman.

Pre-existing diseases

Like health insurance, travel insurance doesn't cover pre-existing diseases. However, some insurers do give you cover for life-threatening conditions that may arise due to pre-existing diseases. Do check with your insurer what diseases are covered if you need hospitalisation and what are not.

These are broadly what you should look for while picking up a travel insurance policy. Do remember to also do some R&D on the insurer. Be partial to the ones have travel insurance as their core business as they are more likely to have better networks and expertise than insurers that ALSO offer travel as one of their products.

Bon voyage!