Holidays are a much-needed break that we all need in order to rejuvenate and relax after working hard. But no matter how well planned a holiday is, you can never ignore the chances of a medical or financial emergency cropping up. When planning a holiday with family or friends, a budget is important which should take into account cost of accommodation, travel, sightseeing, food and other expenses. One thing that many tend to overlook but should definitely be on your list istravel insurance. A travel insurance policy is a must so that you can stay protected against financial losses in case of any medical emergency or other common issues while on the trip. There are various policies available and one should read and understand the fine print before buying it. Besides understanding the nuances of a travel insurance policy, you must know about the factors that affect the premium, so that you don’t end up paying a high premium unnecessarily. Let us talk about some of the key factors:
The Sum Insured
Like any other insurance policy, the sum insured is one of the most critical factors that affect the premium amount. The premium is higher for a higher sum insured due to a higher rate. The sum insured should be determined after keeping in mind the destination you intend to travel to. One of the most important components of the sum insured is the cost of medical coverage. Thus, medical costs at your destination should be considered when deciding the sum insured for your Travel Insurance.Being over insured or under insured is not a good idea as the former means paying unnecessary premium and the latter implies problems at the time of a claim. A good sum insured which is able to cover costs adequately in times of a medical emergency is the ideal one, and is the basis of the premium calculation.
Each holiday is different and the coverage also varies from one holiday to the other. There are some holidays which need a basic cover whereas there are some where an additional cover is needed. Additional coverage can be taken for expensive items which you need to carry, or as a cover for risky activities that you might undertake on an adventure trip. Each of these extra covers come at an additional premium and thus, impact the premium payable for travel insurance.Care must be taken while buying a travel insurance policy so that you have adequate coverage. One must know the coverage they need and thus, ensure it is available when buying the policy. The activities on a trip along with the things you are carrying or the flight connections etc. will all affect the premium of the travel insurance policy.
The Policy Type
There are different kinds of travel insurance policies and each has its own premium calculation. Some of the main ones are single or multi-trip plans, senior citizen plans, students plan etc. The choice of the plan has an impact on the premium as the risks involved in each are different. A businessman might prefer a multi trip policy whereas a housewife might only need a single trip one, thus, the premium for both will be different.
The destination you travel to has a major impact on the premium of the travel insurance. For example, as Japan has a higher incidence of natural disasters and is prone to them, the travel insurance premium is high when compared to other Asian countries. As medical expenses are higher in Canada and the USA, the premium of travel insurance is high for anyone travelling to these countries. The insurance company takes into account the destination and the risks and costs involved and then determines the premium for travel insurance.
Duration of Travel
The number of days you are intending to travel for will also determine the premium of your policy. The higher the number of days, the higher will be the premium and vice versa. When you stay for longer, the insurance company has to cover the risks for the increased number of days and thus, they charge more.The duration of travel has a huge impact on the premium calculation too.
Age and Health
When the insurance company underwrites the travel policy of an individual, two very important points they look at are the age and health condition of the insured. The premium tends to be higher for older people and for coverage of pre-existing diseases. This is because a senior citizen or a person with a health problem has a higher chance of falling sick and getting treatment, and thus, the premium charged will be higher.
It is essential to buy travel insurance, if you wish to enjoy peace of mind while on a vacation. And it is easy to keep premiums modestif you keep the above points in mind. All that you need to do is compare policies and buy the one that suits your needs the best. There are various factors which will affect the premium, so you should try and buy a comprehensive policy and not compromise on the coverage due to the amount of premium payable.