Check your insurance before travelling

Don’t let a dream vacation turn into a financial nightmare. While you can’t always avoid falling ill, you can limit the impact on your wallet. If you haven’t read the fine print in the exclusions and limitations section of your insurance coverage, you could be in for an unpleasant surprise.

David Brown, partner at Al G. Brown and Associates explains what can go wrong and how to avoid it:

A client of ours was on dialysis, and obtained his insurer’s permission to travel to Florida. While there, he had a severe colitis attack unrelated to his kidney failure. He underwent emergency surgery in Florida and convalesced there for several weeks. He was flown back by air ambulance. Once stable, he went to a rehabilitation hospital in Toronto.

The claim was more than $250,000 and could’ve wiped out a large portion of his retirement savings. Since his travel insurance was underwritten properly before he left, the insurer paid the entire claim.

Unfortunately, most travellers don’t consider their emergency healthcare options. Some simply apply for insurance through travel agents. Others rely on their credit card’s coverage.

Troubles with travel insurance

Travel insurance provides blanket coverage, so in many cases there is no real formal underwriting. Instead, when a claim occurs, the insurance company asks the policyholder questions as part of the adjudication process. During this process, they find out whether the person falls under one of the policy’s exclusions or limitations. If this is the case, the insurance never covered them and the claim is denied.

Worse, definitions are not standard. Usually, a pre-existing condition will not be covered if treatment is still ongoing. Fortunately, some contracts will cover pre-existing conditions, but those contracts can be expensive.

Stabilization is another issue. Some contracts say they will cover a pre-existing condition if it has been stable for 90 days or longer. So, if you’ve been taking the same medication for heart disease for several years without adjustments, heart disease might be a covered condition. However, if you change medication 90 days before a trip and have a heart attack while on vacation, the claim could be denied.

What to look for

The best products are underwritten at the time of application. Some of these plans cover pre-existing conditions for one year. If a new condition arises after the policy has been issued, you will be covered as long as it’s properly documented and you have a doctor’s note saying you’re able to travel. At renewal time, the policy will be reviewed and potentially re-priced.

If you have no existing conditions, the contract is issued immediately. If you do have pre-existing conditions, in most cases, the premium will increase to cover the condition.

There are also new contracts that insure people from the ages of 55 to 85, with special pricing for those over 85. The contracts are available for one year, and cover trip lengths of 30, 60, 90 or 120 days. (If you’re going on shorter trips, then you can select the 30-day length.) After the end of the year, you would apply to renew her coverage for the next year. You can change the trip length at that point.

You’ll be asked to answer questions such as:

1) Number of medications you’re taking, and for what medical conditions;

2) If you’ve had a heart attack, stroke and/or transient ischemic attack within the last 24 months;

3) Number of medical conditions for which you’re receiving treatment; and

4) Whether you’ve been diagnosed with other medical conditions.

Remember that underwritten contracts must be sold through licensed advisors, and you might be protected through the agent’s liability coverage.

These new underwritten travel insurance products combine the best components of life, group, and property and casualty insurance. They might be more expensive than travel agent or credit card policies, but they could be a good choice for you.