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Think You Have Sufficient Travel Insurance? Think Again

Jan. 26, 2017
4 mins
A young couple laugh as they read a map and find their directions

Despite the weak Canadian dollar, winter-weary snowbirds and March breakers are still heading south for vacation. If you're one of these people, you probably understand that you need to pack more than just sunscreen for protection.

Even if your travel budget is tight, spending a bit extra on travel insurance could save your family thousands in medical expenses related to illness, injury or death while beyond the border. Step one in shopping for travel insurance is to check if you're already covered in the first place. If you are a part of a group employee health plan, this likely includes some form of travel insurance.

And most travel rewards credit cards offer travel and medical insurance as a cardholder perk. However, both of these options typically cover only accidents, not illness, and as for credit card insurance, your coverage is usually limited to travel costs that were paid for with that card. So if you think you have sufficient travel insurance, it’s best to consider the following before heading out of town.

Pay attention to what comes with employee health benefits

The group health plan offered by your employer will most likely come with some form of travel insurance. However, most of these plans don’t cover trip cancellation or interruption insurance.

Get all the details of your specific plan from HR – including whether family members are covered (most plans have an age limit for children), or if there are any restrictions on the length of your coverage. For example, some employer-based plans won't pay for emergency hospital stays lasting more than three weeks.

Be wary of coverage that comes with cards

You may have noticed that your credit card makes some mention of travel insurance coverage. However, there is no standard and different cards offer different types of coverage, which may or may not be beneficial to you.

Credit card travel insurance may not provide the full extent of coverage that comes with a standard travel insurance package and won’t cover pre-existing conditions to the extent that standalone insurance allows. An American Express Gold Rewards Card, for instance, will cover eligible emergency medical expenses incurred while travelling outside of Canada, up to a maximum of $5 million. The trouble is, it’s only good for the first 15 consecutive days of each trip and you have to be under the age of 65 to collect – a common age threshold among major cards.

One exception is the National Bank World Elite MasterCard, which extends it medical coverage to those aged 65 to 74 – but this is once again only for the first 15 consecutive days. If you're heading to a high-risk destination or travelling to airports in remote locations, make sure your credit card travel insurance package also includes things like lost baggage protection and trip cancellation coverage.

The BMO World Elite MasterCard may be preferable for travel plan change coverage, offering $2,500 per person and $5,000 per group. This is a bit more compared to other travel cards.

Your provincial health care is not enough

Lastly, you should be aware that provincial health care plans do not cover much, if anything, when you are travelling internationally. While a hospital stay could cost you tens of thousands of dollars in another country, your provincial health care will only pay as much as that particular service would have cost in Canada. The Ontario Health Insurance Plan (OHIP), for example, only covers up to $400 per day if you were in a cardiac ward or ICU, and British Columbia’s plan covers even less than that. You will be responsible for paying the rest.

Understand what you need in a travel insurance plan

Getting broad-based medical coverage is your best bet when you travel, even if you're just entering the United States on a short getaway. It gives you more well-rounded coverage with less risk of something not being covered in the event of an emergency.

A good standard plan should cover unexpected illness, disease or injury, emergency transportation, doctors' fees, hospital stays and medication. More elaborate plans may include diagnostic tests, dental treatment, air and ground ambulance, paramedic fees and private nursing.

Transportation-related costs may also be covered if you, your spouse or dependent children have to return home or stay at the bedside of the hospitalized person. A per diem allowance may be thrown in as well for meals and accommodation, if the medical emergency prevents your return to Canada. Pre-existing medical conditions are generally not covered though.

The cost of your policy depends on several factors including your age, your health conditions, the duration of the trip, the extent of coverage and the chosen deductible amount. Your deductible is the amount you agree to pay for any medical treatment you receive. If you choose a $250 deductible, for instance, you'll have to pay the first $250 towards any claim. You may be able to reduce your premiums somewhat by agreeing to a higher deductible.

Ask questions of your credit card company, employer and travel insurance agent if you're not exactly sure of what kind of travel insurance you have, or if you even have any coverage at all. And shop around to ensure you get the best deal for the travel insurance coverage you need.

Gordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a consulting firm focusing on retirement readiness. Gordon was a columnist for the Globe & Mail and Morningstar for many years and is also currently a columnist for Investment Executive, Canada’s national newspaper for financial advisors.

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