When it comes to travelling, you might face a dilemma when deciding if you should buy travel insurance or not.
After all, you might be hesitant to add another expense to your travel budget after forking out a huge amount for your airfare, accommodation, food, attractions and activities.
Still, we believe that buying the right travel insurance is vital as, typically, travel insurance covers a range of situations, such as trip cancellations, interruptions, or delays, as well as medical emergencies during the trip. Without insurance, travellers may risk losing the money invested in non-refundable aspects of their trip, such as flights or accommodations.
If you think you can’t afford to pay out of your pocket for such expenses, read on to find out why we think paying for the right travel insurance is making a smarter personal finance decision on your travels.
TL;DR: Travel Insurance in Singapore — Is Travel Insurance Really Necessary?
Disclaimer: The Information provided by Seedly does not constitute an offer or solicitation to buy or sell any insurance product(s). It does not take into account the specific objectives or particular needs of any person. We strongly advise you to seek advice from a licensed insurance professional before purchasing any insurance products and/or services.
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- What is Travel Insurance?
- Why You Need Travel Insurance: Cost of Getting Sick Overseas Without It
- What Does Travel Insurance Cover?
- What Does Travel Insurance NOT Cover?
- Do I Need Travel Insurance?
What is Travel Insurance?
Like the name suggests, travel insurance protects you against financial losses due to unforeseen circumstances and emergencies like accidents, serious illness, injury, flight or other transportation delays, loss of personal belongings, personal liability and other unfortunate events.
But of course, you will need to pay insurance premiums for this coverage, with the amount you pay dependent on factors like your age, type of coverage, the country you are travelling to and more.
When you go on a trip, most people will purchase a standalone travel insurance policy. However, you might find that you might be protected already.
Firstly, your personal accident plan might encompass a provision extending coverage to incidents abroad or even globally. This implies that you and your family can seek benefits for personal accidents, even if they occur in a foreign country.
Travel insurance plans vary widely, ranging from basic options with limited benefits and low coverage caps to more comprehensive ones offering a broad range of benefits and higher limits. Consequently, the premiums associated with these different tiers of coverage can vary significantly. It’s crucial to note that coverage, benefits, and terms and conditions vary across different products and insurers. As with other types of insurance, travel insurance policies include exclusions designed to maintain reasonable premium levels.
While premium costs are a factor, it’s essential not to base your decision solely on this aspect. It’s advisable to select a travel insurance policy that aligns best with your specific needs. Carefully reviewing the policy contract is crucial to understanding the inclusions and exclusions. For instance, many policies typically do not cover pre-existing conditions, and there may be limitations on the amount you can claim for medical expenses.
Also, some travel insurance policies might be better for families instead of individuals:
Being well-informed about these details ensures that you make a smarter personal fianance decision that suits your requirements and provides the necessary coverage.
Is Travel Insurance Really Necessary?
That begs the question: do you actually need this coverage?
Well, what you are buying is actually peace of mind as it is there to cover you for your travel inconveniences and losses.
If you encounter any unfortunate incidents that are eligible for a claim, having travel insurance can alleviate a substantial part of the financial strain that you would otherwise need to deal with. This ensures that you and your family can embark on your travels and fully enjoy your journey without unnecessary worries.
More specifically, buying travel insurance is more worthwhile if you are:
- If the costs of your non-refundable trip exceed what you can comfortably bear losing
- Travelling overseas
- When journeying to remote locations with limited access to healthcare facilities
- If your trip involves connecting flights or multiple destinations
- When you wish to be partly reimbursed in the event of trip cancellation, you choose to return early for any reason.
Why You Need Travel Insurance: Cost of Getting Sick Overseas Without It
More specifically, you need to be aware that as a foreign traveller who is ineligible for subsidies in the host country, you will need to pay full price for any treatment you receive.
In the event of a medical emergency, the luxury of seeking out the most affordable hospital or securing assistance from a medical student in exchange for exposure is not a viable option.
In essence, taking the risk of travelling without insurance is strongly discouraged. The repercussions of such a decision could involve legal action, travel restrictions, or even arrest and imprisonment if you cannot settle medical bills resulting from an accident or severe injury.
While the likelihood of requiring medical attention while travelling is relatively low, even for minor ailments, having travel insurance remains crucial. This is because, in certain cases, your insurance coverage may still apply, especially if outpatient treatment is included in your travel plan. This provision allows you to access treatments that facilitate a speedier recovery, enabling you to resume enjoying the remainder of your trip, even if these treatments incur additional costs.
As the old adage goes, don’t be penny wise and pound foolish.
Take this example from the Ministry of Foreign Affairs:
A healthy Singaporean visiting China suffered a sudden brain haemorrhage and had to be hospitalised. Given his critical condition, the Singaporean remained hospitalised for two weeks and chalked up a daily bill of $1,000. When he was eventually cleared by the hospital for medical evacuation back to Singapore, the flight evacuation cost almost $60,000. Unfortunately, the Singaporean had not purchased any travel insurance and his family had to foot the entire hospital bill and the cost of medical evacuation amounting to $74,000.
That’s not all.
According to insurer Allianz Partners, the combined value of the top 30 claims made by individuals under the age of 30 amounted to almost US$500,000 (~S$671,148) from October 2021 to October 2022.
The insurance company reported that the travel insurance claims it handled varied from US$6,000 (~S$8,054) to almost US$50,000 (S$67,115), with the largest claims for expenses related to medical treatment, ambulances, air evacuations, and hospitalization. Notably, four out of five of the priciest claims made by individuals under 30 were associated with illnesses or injuries sustained during travel to Europe.
In my opinion, travel insurance is something you shouldn’t skimp on as, in the event of an emergency overseas, you or your family and friends will be required to bear the heavy burden of any resulting expenses.
What Does Travel Insurance Cover?
Speaking of expenses, travel insurance actually has a wide range of benefits:
These benefits can also vary among insurance companies and by plans in terms of limits/excess, definition and insured perils. Most travel insurance policies would offer Personal Accident, Medical Expenses (overseas and in Singapore), Trip Cancellation and Curtailment, Travel Delay and Emergency Medical Evacuation coverage.
These primary coverage benefits are explained briefly below:
- Personal Accident: Covers accidental injuries which result in death or permanent total disablement.
- Medical Expenses: Reimburse the cost of medical treatments (inpatient and outpatient) while you are overseas and follow-up treatments when you return to Singapore.
- Trip Cancellation and Curtailment: (I.e. situations defined as per policy that result in you having to abandon or change your original travel plans) will reimburse you on the non-refundable and irrecoverable portions of prepaid travel expenses, subject to the insured perils of each insurance company.
- Travel Delay: Will pay a cash benefit usually in every block of X hours of delay in the departure of the scheduled public conveyance, subject to the insured perils as defined in the policy wording (e.g. the insurer will pay $100 for every 6 hours of delay).
- Emergency Medical Evacuation: Will reimburse the cost of transportation incurred while overseas as a result of serious injury/sickness. It is usually a requirement in the policy that the insured contact the company named by the insurer for assistance, e.g. International SOS or Mondial Assistance.
- Loss or Theft of Personal Possessions: will reimburse you for losing your possessions, such as baggage, travel documents and money.
Note: Do note that benefits and scope of coverage might be limited to certain conditions or situations. For instance, the insurer might cover a claim for loss of baggage / personal belongings only if the loss was due to theft or burglary. Hence, it is essential to read the policy wording, which lays out the benefits, scope, limitations and exclusions of the insurance policy to ensure that the purchased policy meets your needs.
What Does Travel Insurance NOT Cover?
Just like other types of insurance, travel insurance has certain exclusions or things it doesn’t cover. This is done to prevent people from taking unnecessary risks and to keep the cost of insurance down.
There are two main reasons for these exclusions:
- Moral Hazard: This happens when having insurance makes someone more likely to take risks because they don’t have to pay for the full consequences of their actions. For example, if someone knows their travel insurance will cover any injury, they might be more willing to do risky activities.
- Adverse Selection: This occurs when insurance companies end up covering risks that have a higher chance of causing a loss than they expected when setting the insurance price. For instance, someone going to a dangerous place like an active conflict zone might want to buy more travel insurance or life insurance.
Also, here’s a non-exhaustive list of everyday conditions/incidents not covered by travel insurance (i.e. the insurer will not entertain any claims due to loss or liability caused indirectly or directly by these conditions/incidents):
- Self-inflicted injuries
- Existing health conditions
- Dangerous activities like extreme sports and hazardous or military activities
- Mental health issues
- Nervous disorders
- Natural disasters
- Radioactivity from nuclear materials
- War and civil unrest
- Travel to specific high-risk countries.
Remember, it’s crucial to read the exclusions section in your travel insurance policy before buying it to understand what situations won’t be covered.
Take Note of Adventure or Extreme Sports Cover
Take note that your insurer’s definition of “extreme sport” might not align with yours, potentially leaving you without coverage in situations like being thrown off a horse and breaking your ribs.
So, look closely at what activities are considered high-risk and, therefore, not covered by a standard travel policy. If you’re planning on doing something adventurous like whitewater rafting, it’s a good idea to think about getting an add-on specifically for adventure or extreme sports to make sure you’re protected.
- Hiking or mountaineering – up to 3,500m and does not require the use of specific climbing equipment/ropes
- Scuba Diving – no deeper than 30 m deep with a qualified diving instructor; or diving with a buddy (both must be PADI-certified)
under the Personal Accident coverage category.
That’s not all.
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From now till 10 March 2024, you will also get a FREE Apple AirTag (worth S$45)! No min. premium required.
Do I Need Travel Insurance?
If you die die don’t want to buy travel insurance, all I can say to you is this:
Because if something (touch wood) untoward were to happen to you, you would bear the full cost of any resulting expenses.