Annual travel insurance - when is it the better choice for you?

This article first appeared on MoneySmart's Annual Travel Insurance - When Is It the Better Choice for You?

Singapore has become a nation of experienced travellers.

In fact, travelling overseas has become so commonplace in Singapore that, these days, some jetsetters I know can just go on spontaneous trips without much planning.

While that may seem fun for the adventurous types, it may actually be costing them more, especially when it comes to buying travel insurance. When is buying annual travel insurance a better choice than single-trip travel insurance?

Here's a simple infographic to illustrate the difference, and 3 key questions to consider:

1. Will annual travel insurance be cheaper for me?

Cost is definitely a major deciding factor. If you're travelling so often that the pages of your passport looks like the scribblings of a child's colouring book, it's almost a given that buying annual travel insurance is cheaper in the long run.

Of course, most of us can't afford to be travelling that often, so the decision making gets a little trickier.

You can expect the cheapest annual travel insurance to cost you between $250 and $300 a year.

This may seem like a hefty amount at first, but consider this: a single-trip for the same kind of coverage will cost you $80 to $100 for a trip to the US.

That means buying single-trip insurance for as little as three overseas trips in a year can cost you the same as an unlimited number of trips on an annual insurance plan.

But then, of course, you may say: It's rare for Singaporeans to travel so often overseas, so why should they bother with annual travel insurance? That's a good point and brings me to the next question.

2. Will annual travel insurance be more convenient for me?

Most annual travel insurance policies on the market today are for unlimited trips within a year-long timeframe, as long as the trip does not exceed 90 days.

This means, with an annual travel insurance plan, you can travel at any time without the hassle of finding the cheapest travel insurance each time you plan to leave the country.

It also means you're covered whether it's a fortnight in the US or Europe, a weekend in Bangkok or Batam, or just an afternoon in JB.

Do note that the cost of annual travel insurance depends mainly on the furthest country you're planning to visit that year.

Naturally, restricting your coverage to countries in Asia, for example, would be cheaper that having coverage worldwide.

This means that if you do have to travel outside Asia, you will need to think about buying a single-trip policy, which will not only add on to your costs, but also means adding on to your concerns before you travel.

In the example above of Mr Teo, if he only buys single-trip travel insurance, it would mean having to do research on the cheapest travel insurance each time he plans to leave the country.

And even with the best travel insurance comparison, Mr Teo still has to make sure that he's sufficiently covered for each trip.

Buying annual travel insurance is as convenient as clicking a button and you're covered for the rest of the year at the same level of coverage.

Which actually brings me to the last question…

3. Does annual travel insurance provide more coverage?

As we said earlier, it is definitely more convenient to buy annual travel insurance, because it provides coverage for unlimited trips (no more than 90 days) over a year-long timeframe.

An annual travel insurance policy that covers you globally also means that this coverage is extended regardless of where in the world you travel.

Let me explain why this is important.

The three biggest factors when choosing a travel insurance policy is to check out their medical coverage (especially medical evacuation), their flight delay coverage and their cancellation coverage.

Usually when a policy has really cheap premiums, it's because their coverage for one or more of these three factors is really low.

One of the cheapest annual travel insurance policies right now gives you medical coverage for up to $250,000, flight delay coverage of up to $500 and trip cancellation coverage of $5,000.

Currently, this will cost you $270 per year.

That same coverage for a single-trip policy would cost at least $70, while a cheaper single-trip policy would cost about $50, but would give you only half the coverage of the annual travel insurance policy.

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