Read the fine print carefully because even a policy with a high sum assured may have sub-limits
With schools set to close soon due to summer holidays, a large number of people will seek the relief of salubrious climates abroad. And it is always good to have a comprehensive insurance cover against all contingencies.
But, before you buy the insurance cover, it is important to read the fine print, lest you might be left in a soup like 60-year-old G Srinivasan, who had gone to the United States for his daughter’s graduation in 2015. The management consultant from Bengaluru suffered a heart attack while driving from Chicago to Michigan.
Even though he had a comprehensive cover of $500,000, he realised later that the policy had sub-limits for people over 56. His limit was only $30,000.
Staring at a bill of $100,000, he called the insurance company’s partner who assured him that they would take care of the amount. “Ten-eleven months have passed since the operation in the US, but I haven’t been sent a bill for the balance $70,000.
I understand the insurance company paid $30,000. If they send a bill, I will be in the soup,” he says hoping that maybe the hospital settled the case for $30,000.
He questions the need to have a critical issue like sub-limits on page 12 of a 14-page document. His advice: Read the entire policy document, including the fine print, before buying a policy. Insurers say that people should read the policy documents carefully before buying them.
Policies aren’t expensive: First, and foremost, remember that these policies do not cost much. So, don’t let sum assured amounts of $200,000 and $500,000 deter you. Your main concern should be to get your family comprehensively insured against all sorts of contingencies. “Premium levels should not be the determining factor in your choice of policy since they are quite low,” says Arvind Laddha, CEO, Vantage Insurance Brokers.
For an individual aged 40 travelling to the US for three weeks who opts for a sum insured of $50,000, the premium will come to around Rs 1,200-1,500.
If this person chooses to raise his sum insured to $200,000, his premium goes up to only Rs 1,700-2,000. Laddha explains that premium levels tend to be low because the number of claims is low and because this policy doesn’t cover pre-existing ailments.
Prioritise the features: A standard foreign travel policy typically covers hospitalisation, personal accident, loss or delay of baggage, trip cancellation, loss of passport, emergency dental treatment, etc. Make sure that your policy offers a personal liability cover.
“If you have an accident and end up hurting someone abroad, you could be sued for it and could end up with a big liability,” says Sanjiv Bajaj, managing director, Bajaj Capital.
Some policies offer coverage against hijacks. Some also have an emergency cash advance facility: If you lose your money and need emergency cash, the insurance company will rush a sum of $500-1,000 to you.
Some pay for a relative to visit you if you get hospitalised abroad. Some policies offer emergency evacuation cover and some also offer to bring back the mortal remains in case of death. Compare a few policies, prioritise the features as must-have versus good-to-have, and then buy a policy that has all of the former.
Get the right sum assured: When travelling to a developed country like the US or countries in Europe, etc., make sure that the sum insured on your policy is adequate, since hospitalisation costs tend to be exorbitant in these countries.
“When going to an advanced country, buy individual covers for the family of around $250,000-300,000. On the other hand, if you are travelling to a Southeast Asian country, a family floater of $150,000 to $200,000 may suffice (for a family of three going on a fortnight’s trip),” says Puneet Sahni, head of product development, SBI General Insurance.
Take into account the duration of your stay. In case you are buying a floater cover, factor in account the size of your family. Go for a higher cover if a senior citizen is part of your entourage.
Going to a remote place?
If you are travelling to a remote destination, make sure that your insurance policy offers provision for evacuation. “Your insurer should be able to get you evacuated via a chopper or an aeroplane in case of a health emergency to a city where high-quality health care facilities are available,” says Bajaj.
Research the service provider: Not all may be lucky like Srinivasan whose service provider seems to have settled the $100,000 bill for just $30,000. Since all the emergencies will arise in a foreign land where you may be entirely without support, the quality of the service provider with which your insurance company has tied up becomes crucial.
Go online and do a search on the size and reputation of the service provider. Also ask your insurer whether it has a network of hospitals in the country you are visiting and can provide cashless benefit there.
Watch out for sub-limits, exclusions: The most important element of an overseas travel insurance policy is the hospitalisation cover. Read the policy document from cover to cover to ensure that there are no sub-limits on this cover. People in the fifties should especially watch out for sub-limits.
Says M Ravichandran, president-Insurance, Tata AIG General Insurance: “Your policy may be for $500,000 but there may be a sub-limit of $50,000 on medical cover for people above 60. Be very clear about the sum assured available and the sub-limits applicable for your age.”
All policies come with sub-limits on the relatively less important covers such as dental treatment, loss of baggage, loss of passport, etc. “Different policies have different levels of sub-limits. Compare a few to see which insurer is giving the best limits on these features,” says Laddha.
Also, an foreign travel insurance policy will not cover you for pre-existing diseases. It will also not cover you for adventure sports activities. Use of drugs and mental illnesses are also excluded. Beyond these standard exclusions, watch out for others; your policy may not cover you for delay in baggage on the return journey. In this case, it would be a good idea to opt for a policy that offers door-to-door coverage.
Deductibles: Check your insurance policy for deductibles. If a company has a deductible limit of, say $500, it means that you will have to pay up to this amount out of your own pocket. Only liabilities above this level will be paid for by the insurance company. Make sure that your policy has reasonable deductible limits that you can afford.
Deductibles also exist in terms of time. “Some policies will reimburse you only if the flight or baggage is delayed beyond six hours,” informs Sahni.
Again, avoid policies with unreasonable limits.
Prepare for a contingency
Before leaving Indian shores, go through the policy kit given to you. It will have the emergency number of the call centre which you should call in case of an emergency. Make sure that you store the number at a place where it is easily accessible and is not lost with the rest of your baggage.
Learn about the procedures for making a claim. If you lose your baggage, the insurer may not reimburse you unless you can produce documentary evidence, such as a first information report (FIR) filed in a police station abroad. A copy of the notification to the Indian consulate may be required in case of loss of passport.
“Making the right declarations about your health status at the time of buying the policy will help eliminate hasslesat the time of claims,” says Sugathan.
Many people buy overseas travel insurance only if they are travelling to a Schengen country, where it is mandatory. Buy this policy not to fulfil a regulatory requirement but to protect your family against unforeseen contingencies.
Photograph: Desmond Boylan/Reuters