By Lorna Tan, Finance Correspondent

The recent unrest in Mumbai and Bangkok is a harsh reminder that there is something you should not leave home without. And it is not your credit card.

Adequate travel insurance is now arguably just as important as your passport when you are heading overseas.
These policies cover the usual risks such as loss of baggage and trip cancellation.

But events in India and Thailand have illustrated that things can quickly become even more complicated.

Travellers can get stuck abroad for much longer than they intended - and that raises questions over whether your travel policy offers the option of extending the cut-off date.

Experts advise travellers to consider this and other issues carefully, and to shop around to find a policy that meets your needs.

Most people buy travel cover primarily because overseas medical expenses can be very high, said the president of the General Insurance Association (GIA), Mr Derek Teo.

'Purchasing a travel policy gives the policyholder peace of mind, so that he can enjoy the trip with no worries over hefty medical bills should he be suddenly struck with major illness or sustain serious accidental injuries.'

But it is also vital to ensure the coverage is valid even if you are caught up in events such as terrorism or riots.

Mr Patrick Lim, associate director of financial advisory firm PromiseLand, said that taking out travel insurance has been a 'no-brainer' since the New York terrorist attacks in 2001. Events in Mumbai and Bangkok have simply reinforced this point.

The good news is that it does not cost an arm or a leg to buy travel insurance.

For instance, insurance cooperative NTUC Income charges $52 for its 'classic' range of benefits for a family of four visiting Hong Kong for seven days. That premium takes into account a current promotional discount of up to 30 per cent.

Income also allows customers to call a 24-hour hotline to activate travel insurance at any time before their departure. The service is very popular, with 90 per cent of its travel insurance activated online or over the phone.

Bear in mind that not all travel policies are created equal so you should always know your options and read the fine print on what is covered and excluded.

Some general exclusions are pre-existing illness, suicide, injury or sickness resulting from biochemical and nuclear terrorism, and wars.

Here is a checklist of things to look out for when considering a travel policy:

1 Does it meet your needs?

Make sure the benefits are adequate for you. A superior plan commands a higher premium but it will offer better benefits such as higher claim limits for death and medical expenses.

2 Premiums

Make sure the policy covers the period you are abroad and all the countries you will visit. Insurers also offer group plans covering two adults and children below a certain age.

For regular travellers, it may be more cost-effective to buy annual cover. This avoids the hassle of arranging a policy for every trip you make.

3 Terrorism cover

Check if your travel policy covers terrorism and other unrest. Some policies contain conditions, even if they might seem rather obvious. For instance, the policy might be valid provided the insured is not an active participant in the unrest, said Mr Teo.

4 Option to extend travel cover

Some travel plans such as the AIG Assist travel policy give the policyholder the option to extend the coverage before it expires. AIG Assist is marketed by general insurer American Home Assurance, a unit of United States insurer American International Group (AIG).

The option to extend the coverage would certainly have come in handy if you had been one of the 350,000 passengers stranded in Bangkok when its airports were seized by Thai anti-government activists. The airport blockade lasted eight days.

5 Automatic extension of coverage

AIG Assist automatically extends the coverage free for 72 hours or three days if your trip is extended due to 'circumstances beyond your control'.

These include terrorist attacks and riots. Further extensions beyond those three days are possible with an additional premium payment.

Income's travel insurance does not cover travel delays and trip cancellations due to riots, said Mr Pui Phusangmook, its senior vice-president and general manager of its general insurance division.

However, in the case of the recent unrest in Bangkok, it made an exception and automatically extended the period of insurance for policyholders who were already in the Thai capital and unable to get a flight back to Singapore.
The extension was free for up to 14 days.

This automatic extension kicked in in May when Income's travel insurance policyholders were affected by the earthquake in Sichuan, China.

Some policies also allow for automatic extension of the coverage for up to 30 days free if you are hospitalised or quarantined.

6 Does the policy cover additional travel expenses?
Some policies cover additional travel or accommodation expenses incurred after the trip has started, in the event that the policyholder becomes seriously injured or sick. They also offer coverage if the travel companion of the insured person dies in circumstances such as natural disasters or riots in an area not usually affected by unrest.

7 Trip cancellation

Some policies cover the loss of non-refundable deposits or other charges paid in advance, in the event of the financial collapse of the tour operator, for instance.

Mr Lim said that it makes sense to ensure that such risks are covered, particularly during a recession when businesses are operating in an uncertain financial climate.

Income said that if you want this coverage, you should buy and activate your travel policy as soon as you pay a deposit to travel agencies or airlines.

8 Overseas medical expenses and evacuation

This covers medical expenses incurred overseas, including hospitalisation. Some insurers even cover treatment by traditional Chinese physicians.

Four years ago, Mrs Sulin Ho became a firm advocate of travel insurance after her father-in-law, then 70, suffered a stroke when he was visiting his daughter in Los Angeles. He underwent an operation there, and when his condition stabilised more than a week later, he was evacuated to Singapore, accompanied by a doctor.

As well as covering medical expenses, his insurance policy covered the cost of flying Mrs Ho's husband to visit his father in Los Angeles during the period he was unable to travel. In all, it would have cost the Ho family more than $500,000 if the senior Mr Ho had not been covered by travel insurance.

'We would have had to take out a loan if my father-in-law had not bought a travel policy then. Now I'm a firm believer in travel insurance and I constantly remind my friends and colleagues to buy cover when they fly,' said Mrs Ho.

However, Mr Lim emphasised that the story would not have had such a satisfactory ending had the condition or illness been pre-existing - since these are excluded from all travel policies.

9 Delayed or damaged or lost baggage

This covers delay, damage or loss to baggage, clothing and laptops. The insurer usually stipulates a cap per item. For instance, a laptop claim is typically capped at $1,000.

10 Repatriation of remains and compassionate visits

This feature covers the expense of returning your remains to Singapore in the event that you die during the trip. It also covers the expense of one relative or friend travelling to the scene if assistance is required with the arrangements for repatriating your remains.

lorna@sph.com.sg

This article was first published in The Straits Times on Dec 7, 2008.

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