Travel Insurance:What you really need
Personal Finance Exclusive

Buying travel insurance is often done to comply with the tour operator’s demand or the requirement of a foreign country for granting a visa. Raj Pradhan explains the risks that can inflict heavy financial damage unless you are insured and which of these can be taken care of by common sense

YN Bhattacharya, a senior banker, and his family were excited about the prospect of the ‘European Whirl’ tour of Cox and Kings (C&K) in June 2012. In the buzz of a foreign tour, they had signed off the terms and conditions (T&C) printed in tiny letters across one page. This was actually a consolidation of five pages of T&C in normal font, and would have needed a magnifier to really read it. Mr Bhattacharya had bought the C&K mandated travel insurance thinking that they would be covered for any mishap. But the 32 C&K tourists on that tour were soon to realise that the devil is in the detail, which is in fine print.

The 32 tourists were robbed of their valuables that had been left in the bus on the insistence of the tour manager on the last day at Rome. In response, C&K has given them a cold shoulder. The prospect of the insurance company paying them anything is zero unless they file a consumer complaint. C&K’s argument is that they are not responsible for the loss of any baggage, valuables and personal effects of the passengers. What is unique in this case is that the passengers lost their belongings by following the C&K tour manager’s instructions; yet, C&K has shirked its responsibility. C&K asserts that T&C mentions “passengers should not leave any property in the coach while disembarking.” But this is a lie. These wordings are not even present in the T&C. Even more astonishing is that the tour manager gave the exact opposite directions during each of the 10 days of the tour. If a 250-year-old tour operator like Cox & Kings can act like a fly-by-night operator, how can the customer believe in the system, as a travel insurance company can never cover every possible situation?

While buying travel insurance, customers hardly know what is really covered. For instance, the C&K fine print said that the cover is for checked-in baggage with the airline. It does not cover loss due to theft. Like Oriental Travel Insurance purchased through C&K, most insurers only cover checked-in baggage. We came across only one product which covers theft, but with a caveat. According to Karan Chopra, head—retail business, HDFC ERGO, “Our travel insurance product covers theft from a motor vehicle, if it is securely locked in the boot and entry to such vehicle is gained by visible, violent and forcible means.”

There are reasons why only checked-in baggage is covered by most insurers. According to Gaurav Garg, MD and CEO, Tata AIG General Insurance, “Checked baggage in the custody of the common carrier can be tracked, which allows insurers to get certificates of loss from the common carrier. Any other baggage loss, which is not checked-in, cannot be certified in any manner and, hence, coverage is not offered.” There is hope that more insurers will cover theft. According to Amit Bhandari, VP—underwriting and products, ICICI Lombard, “A new cover, needs to be filed with the regulator and approved. Currently, we have the provision to offer coverage only for the loss of checked-in baggage. However, we are considering offering coverage for loss of baggage due to theft in the near future.”

Even if travel insurance purchased through C&K had had this clause, it would still not have helped as there was no forced entry or tampering with the bus lock. It seemed to be an inside job. The lesson is to not buy travel insurance blindly. If certain situations are not covered, you have to be extra vigilant about protecting your assets in a foreign land. Even a complaint at a police station in Rome proved futile for the C&K tourists. The cops did not even bother to come out of the police station to inspect the bus. Who can you trust if not the system of a West European nation?

One of the 32 passengers lost his passport and ticket in the theft. He was left stranded in Rome. C&K refused to help. The fine print of C&K T&C states: “If you lose your passport, visa, tickets, etc, you may have to incur extra expenses, for which you alone shall be responsible.” Moreover, the T&C of Oriental Travel Insurance covering loss of passport excludes the following: “Loss or theft of passport left unattended by the insured person unless located in a locked hotel room or apartment and an appropriate sized safety deposit box was not available for use by the insured person.” There is a low chance of getting insurance reimbursement in this case.

A comprehensive travel insurance policy covers unexpected medical and non-medical expenses when you are travelling abroad. If the baggage loss is only for checked-in luggage and the lost passport covers loss only from a secured location, you may wonder if you really need this comprehensive travel insurance. Mr Bhattacharya had paid a premium of Rs1,593 for travel insurance to cover himself for 12 days in Europe. He discovered that it did not cover what he really wanted.

You will often read media articles extolling the virtues of travel insurance. They lead you to believe that you will be a loser if you step out of your home without insuring your travel. Insurance companies too jump in to play on the fear factor. Know your situation and don’t blindly sign on travel insurance papers. Insurance companies have to strike a balance between covering everything under the sun, which will mean an unaffordable premium, and covering too little that would make the product useless. There is one risk cover during travel that you cannot afford to ignore; it is an overseas mediclaim policy (OMP). Lack of cover may mean going bankrupt. You need to know its fine print and the ‘must-have’ features. Read on.

Less value for bundled cover
Travel insurance covers a lot of items that come as a bundle even if you are interested only in OMP. So you will end up paying for things you really don’t need. According to Tata AIG, “Today, all insurance companies have filed travel insurance policies with the regulator that contain both accident and sickness cover, apart from travel inconvenience benefits like baggage loss, passport loss, etc. Hence, it may not be possible to purchase a policy without these add-on covers.” But, according to ICICI Lombard, “A customer can purchase a standalone OMP. General insurance companies offer a special plan which is a pure medical plan in nature. Customers can opt for this plan if they do not want other benefits in the travel policy.” These are contradictory statements. So look out for what you are getting.

There are reasons to consider non-medical cover. Gaurav Garg says, “Our experience has shown that over 60% of claims are for travel inconveniences such as passport loss, baggage loss, etc. Hence, a travel cover that includes various features besides hospitalisation benefits is considered a complete protection for any overseas traveller.” Max Bupa’s International Medical Emergency policy covers only health insurance for multiple trips of 180 days abroad in a policy year. While some insurers offer cover only for 30 to 90 days per trip, there is no such restriction in the Max Bupa product. All other insurers offer medical and non-medical covers clubbed in one policy; the list increases depending on the package you choose. The cover can include:

•    Baggage: Loss, delay
•    Loss: International driving licence, passport, laptop, home burglary and fire while abroad
•    Liability: Bail bond insurance
•    Accident: Personal, hijack, hospital daily cash, emergency cash advance
•    Trip: Cancellation, curtailment, delay, missed flight connection
•    Theft: General theft, from secured motor vehicle
•    Others: Tuition fee, family visit, adventure sports, golfers’ hole-in-one.

In case you are carrying valuables, the valuation certificate of jewellery is needed for baggage insurance. Depending on your situation, you may find some or none of the above applicable to you. A person going on a backpack tour with minimum belongings may care less for checked-in baggage loss or delay, missed flight connection and many other covers. Also, the trauma of hijack can be so overwhelming that getting a pittance of an insurance claim may not be worth the premium paid. Only good golfers need insurance to pay for expenses incurred in achieving a hole-in-one at United States Golfer’s Association (USGA) recognised golf courses. One insurer has fine print for flight delay— “In such cases, the airline either offers a refund of the ticket or arranges for the customer to be put on another flight or offers refreshments at the airport lounge, etc. The customer is, thus, compensated from the airline itself; hence, we do not cover it under the travel insurance policy.” Here are more such conditions in fine print.

The claims procedure will be different for non-medical and medical covers. Both will need proper documentation for smooth claims settlement. To make claims for travel delays, along with the duly filled claim forms, some supplementary documents would need to be attached. These include copies of a boarding pass, tickets and baggage tags; copies of correspondence with the airline and other relevant authorities about delay of checked-in baggage; property irregularity report from the airline authorities stating the duration and reason of delay; original bills for essential toiletries or medication purchased, etc. The travel policy is available for tenures ranging from a few days to six months and can be taken as single trip or annual multiple-trip covers.

Let common sense prevail
The first thing to do is to buy your insurance from the insurer and not from tour operators. According to a senior official from a government insurer, “Private players dominate the OMP segment. This is because of higher commission and other incentives paid by them to tour operators. This helps to push their products.” It takes meticulous planning to make an international trip successful. You are away from your home, your comfort zone. You cannot easily get money from friends or relatives, in case of an emergency. You have to keep your cash, credit/debit cards, travel card, traveller’s cheques, etc, in a really safe place while travelling. It’s all about protecting your hard-earned money. There is no single solution for the different risks that may be encountered in a trip abroad; nor can insurance really cover everything.

Listed below are some steps you can take while travelling abroad.

Minimise Financial Exposure: If you are going through a tour operator, you would have pre-paid the tour cost. Why carry lots of cash or jewellery? Rely on credit/debit cards and debit/ATM cards for cash withdrawal if really needed. Pre-paid tour is better than self-managed tour as far as cash on-hand requirement is concerned.

Use Travel Cards: To overcome the disadvantage of carrying cash and also the fees associated with credit/debit cards, a travel card is a good solution.

Limit Shopping: Make sure what you are buying is something you really need and is simply not available in India.

Carry Cheaper Gadgets: Some of the tourists in the Cox and Kings tour lost high-end phones in the theft from the bus. If it is possible, think about carrying cheaper gadgets. Laptop insurance is offered by some insurers which can reimburse the cost in case of theft. Taking a basic laptop model on travel with data backup is another way to minimise risk.

Safekeeping: Use lockers in the hotel, airport for safe keeping.

Health: Get medically ready for a tour. Improving your fitness level before the tour will minimise risk of interruptions due to ill-health. Arduous trips like those to Kailas Mansarovar, Leh-Ladakh call for higher fitness to enjoy the trip.

Home Insurance: One of the travel insurance features is cover for your home while you are abroad. An empty house back home is prone to theft. Keep valuables in a bank locker if you don’t have home cover.

Health self insurance can make you go broke
If the cost of heart surgery becomes Rs40 lakh, Indians will queue outside insurance offices to buy mediclaim. The unaffordable cost will start to pinch a majority of the population. This is the exact reason why you need OMP, especially for travel to US, Canada and Europe. Regular mediclaim can be availed only within India and possibly Nepal and Bhutan. You need a different protection, if you fall ill in another country. In 2011, the average cost per hospital stay in the US was $15,734, according to Comparative Price Report from International Federation of Health Plans. The total costs for coronary artery bypass averaged $10,000 in Asia, $67,583 in the US and $40,954 in Canada. An OMP is something you need.

Any person going abroad on holiday, business, study or employment can avail OMP which covers sudden and unexpected sickness or accident. The cover can include medical treatment, repatriation of remains (within the overall medical limit), emergency repatriation and/or evacuation and dental treatment.

What is Covered?
You need to read the policy wordings to know which health services are covered, the list of doctors and hospitals where the insurance card is accepted, whether there are any deductibles, co-pays and, most important, whether the insurance company will pay upfront rather than reimbursing later. Many companies offer insurance with varying premiums; so it makes sense to do some research. Some insurance companies offer coverage for children below a certain age for no extra cost.

Check the hospitals on the network in the country you are visiting. Cashless will be available only at these hospitals. This is an important feature as there can be serious problems if one does not have the money to pay the advance before treatment. Government insurers have tied up with Coris International; ICICI Lombard has allied with United Health Group; Max Bupa can offer cashless at the network of Bupa. Ensure that the insurance company has an international helpline in the country you intend to visit. Out-patient treatment is generally provided if it is critical and cannot be deferred till the insured's return to India; cashless may not be available for it. In-patient treatment can be done at a hospital near the place where the insured is staying.

According to Gaurav Garg, “In the US, most insurer partner companies have their network of hospitals and, hence, steerage of insured to these hospitals is standard practice. This is, however, not very prevalent in many other countries in the world. The insurance company advises the insured to always call up the TPA prior to hospital admission. This allows guiding the policyholders to network hospitals wherever available.” Premium is charged on the basis of:

•    Plan (single-trip, multi-trip, student or senior citizen plan)
•    Sum insured you have selected
•    Add-ons for adventure sports cover, home insurance while abroad, etc
•    Number of days you desire to stay abroad. This may be extended by some insurers beyond 180 days, on a case to case basis.
•    Travel destination—insurance for US and Canada is costly
•    Age and general health condition.


Some insurers will ask for medical test after the age of 60 years and offer insurance for up to 65 years; beyond that, it will be on a case-to-case basis. For higher ages, the sum insured or cover per illness may be limited to $10,000. Pre-existing ailments may not be covered for any age. Health insurance for senior citizens may be just to give some comfort and not real coverage.

Tata AIG and HDFC ERGO offer travel insurance polices without medical tests for customers up to the age of 70. According to Amit Bhandari, “In overseas travel, most often, customers require insurance urgently -- either for visa application or for some other unforeseen reason. Hence, to avoid any customer inconvenience, ICICI Lombard OMP is offered without medical test. The same holds true for senior citizens as well. The entry age limit is 85 years, in the case of our individual OMP.”

What is not covered?
Some of the exclusions can be:  
•    Pre-existing conditions, except in the case of life-threatening situations. Some plans don’t cover pre-existing conditions at all
•    Maternity, pre-existing ailments and complications arising from them
•    Illness contracted while travelling against the advice of a physician
•     Addiction to alcohol, drugs
•     Venereal diseases, mental disorder, anxiety, depression
•     Sexually transmitted diseases, AIDS, HIV
•     Radiation, nuclear weapons-induced
•     Suicide or attempted suicide
•     Injury caused due to war, terrorism or any illegal acts (unless terrorism is covered)
•     Accident occurring from participation in dangerous sports (unless specifically covered)
•     Kailas Mansarovar tour. Some may not cover cruise travel.


Limits
It may be worthwhile to check the probable cost of medical expenses at your destination. There can be several sub-limits. Some may limit each illness to only US$100,000, irrespective of the sum insured. Senior citizens face the following limits in one OMP:
•     Hospital room and board and hospital miscellaneous expenses—maximum $1,600 per day up to 30 days.
•    Intensive care unit—maximum $3,000 per day up to seven days
•    Surgical treatment—maximum up to $12,000
•    Anaesthetist’s services—up to 25% of surgical treatment
•     Physician’s visit—maximum $75 per day up to 10 visits
•     Diagnostic and pre-admission testing—maximum $750
•     Ambulance services—maximum $500.

Pre-existing Clause
Pre-existing diseases covered in an emergency situation is better than pre-existing not covered at all. Do understand that covering pre-existing in emergency will still be a restricted cover meant to only help get the insured stabilised. The caveat is as follows: “It will provide life saving emergency measures solely designed to relieve acute pain, provided to the insured by the physician for disease/accident arising out of a pre-existing condition. The treatment for these emergency measures would be paid till the insured becomes medically stable or is relieved from acute pain. All further medical cost to maintain medically stable state or to prevent the onset of acute pain would have to be borne by the insured.”

ICICI Lombard, Iffco Tokio, Cholamandalam, Reliance General (limited to US$10,000) and Apollo Munich cover pre-existing illnesses in emergency situations. Tata AIG, HDFC ERGO, Bajaj Allianz and government insurers do not cover pre-existing conditions. According to a senior official of a government insurer, “Pre-existing during emergency situations can be a grey area. There could be differences of opinion regarding the medical condition and treatment. How critical is the insured? Does the treatment have to continue abroad or can the patient be taken back to India? There are no easy answers to know how each situation is handled by the insurer.”

According to Arvind Laddha, CEO, Vantage Insurance Brokers, “We have often found that customers do not know whether a particular ailment is likely to be covered or considered as pre-existing. This is especially true for non-accident claims which may occur in the first few weeks of travel. In these cases, an insurer can reject the claim because it is too close after the date of departure, arguing that the ailment was contracted before departure, but has merely aggravated during the travel. As pre-existing is not covered nor are medicals required, this is an area of ambiguity that does occur to individuals.”

Beyond Indian Insurers
Travel insurance from India covers a trip of 180 days. If you plan to stay abroad for a longer time, you can plan to buy health insurance from local insurance companies. You can also buy health insurance abroad for less than 180 days.

Senior citizens going to the US for stay with children for six months end up paying a hefty premium for health insurance. The premium for an aged couple may be as much as the cost of one airline ticket to US. It is a necessary evil as a health care without insurance while abroad will mean that the children will be responsible for footing hefty hospital bills. If the bills are not cleared, the debt can be recovered by agencies empowered to go after the assets of those taking financial responsibility during visa application, i.e., children. The response to an emergency call in the US is unparalleled. Timely and high quality medical treatment will be given, but it is expensive.

Travelling abroad to expensive healthcare areas like US and Canada is risky, especially for those above 60 years of age or travellers not in the best of health. The premium shoots once you cross the age of 60 years. Beyond 70, apart from high premium, you also have restricted cover per illness which can be grossly inadequate. There is a risk of medical condition not being covered, especially for pre-existing conditions for any age group. Claims may be rejected under the guise of pre-existing illness as there is no medical test in most cases. It will mean humongous expenses if you are unlucky to get into trouble at the wrong place and at the wrong time. The positive side is that government-owned as well as private insurers are supposed to be doing a decent job in claims settlement and still maintaining a profitable portfolio. However, none of the insurers we contacted gave details of claims settlement, rejection and pending cases.

According to one insurer, “The claims experience is satisfactory; but, with the increasing awareness levels, the claims ratios have been steadily increasing.” You have to take a final call about travelling abroad based on your situation. If you go ahead with your trip, do your best to cover the necessary travel risks and not buy what the insurance company wants to sell.”{break}

Overseas Mediclaim Settlement Issues
In June 2012, the Maharashtra Consumer Redressal Commission directed the New India Assurance Company to pay Rs52.07 lakh to Nina Thackersey for repudiating the foreign medical claim and for deficiency in service. The complainant had taken an OMP from New India Assurance Company for US$100,000. While on her trip to Zurich (Switzerland) she complained of constant chest pain and upper abdominal pain, following which she was admitted to Klinik Hirslanden in Zurich. The TPA, namely, Heritage Healthcare refused to entertain her claim on the ground that she had suffered abdominal pains due to alcoholic pancreatitis and liver cirrhosis; ailments related to alcoholism were excluded from claim and, hence, it was not payable. The Swiss doctor confirmed that final diagnosis of her ailment was idiopathic pancreatitis and ruled out the possibility of liver cirrhosis.

According to Dr Henry Perschak, who had treated Nina at the Zurich hospital, “Denial of insurance coverage of the charges was based on false judgement, insufficient medical knowledge and non-existing date.” The complainant also approached Dr Ravindra Bapat, an expert in surgical gastroenterology who, after studying her case papers along with the treatment given by the Zurich doctors, said in an affidavit that Nina Thackersey suffered a mild form of acute pancreatitis.” The clinical feature of the attack is not similar to alcohol-induced pancreatitis,” he said.

According to industry sources,“ New India Assurance is seeking legal opinion and may pursue the case.” It will mean that the customer has to continue with a never-ending fight.

Comments
arun adalja
10 years ago
inspite of paying higher premium when you put a claim insurance company deduct 100$ from your claim.why such things?naturally it is included in a premium when you take insurance.irda must clarify the issue.
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