Why Your Credit Card’s Free Travel Insurance Is Not Enough
These days, going abroad without travel insurance is almost unheard of and many credit cards offer free travel insurance as a perk.
You may think that your credit card’s free travel insurance is enough, but how much coverage does it really offer you? Are you truly protected as you travel? When you’re facing difficult circumstances abroad, the last thing on your mind is to worry if your insurance plan offers sufficient coverage. That’s why it’s always a good idea to invest in buying a travel insurance plan that best suits your needs.
Free Credit Card Travel Insurance Coverage
How does credit card insurance work? Many credit card providers offer travel insurance that includes basic benefits such as:
- Trip Cancellation/Interruption: Covers non-refundable expenses if your trip is cancelled or interrupted for a covered reason.
- Baggage Loss/Delay: Provides reimbursement for lost or delayed luggage.
- Travel Accident Insurance: Offers benefits for accidental death or dismemberment during your trip.
However, these benefits often fall short when it comes to comprehensive coverage. While you may receive flight-related compensation like baggage loss or delay, significant gaps exist for medical expenses, accidents, trip cancellations, and theft, having little to no coverage. In many cases, coverage applies only to the primary cardholder, leaving family members unprotected.
Here’s the thing about complimentary travel insurance — sometimes they aren’t actually free. Based on the credit card’s requirements, you might need to spend a minimum amount on your flight or make other specific purchases before you can enjoy the perks of your “free” coverage.
Activation Requirements
Credit card travel insurance is not automatically activated—certain conditions must be met to ensure coverage:
- Full Payment Requirement: To activate the coverage, travellers must charge the entire cost of their trip to the credit card. Partial payments or booking with alternative methods may void the insurance.
- Advance Activation: Some credit card issuers require additional steps, such as notifying them before departure or enrolling in their travel insurance programme. Failure to complete these steps could result in no coverage.
These conditions often catch travellers off guard, leaving them unsure about their protection until it's too late.
Coverage Limitations and Exclusions
While credit card travel insurance may seem convenient, it often comes with significant limitations:
- Pre-Existing Conditions: Most policies exclude coverage for medical issues that existed before the trip, leaving travellers responsible for unforeseen medical expenses.
- Coverage Caps: Credit card insurance generally has lower payout limits, which may not be enough for serious incidents like emergency medical care or trip cancellations.
- Excluded Activities: Adventure sports or high-risk activities, such as skiing, bungee jumping, or scuba diving, are frequently excluded, meaning any injuries sustained during these activities won't be covered.
Understanding these exclusions is crucial for travellers seeking comprehensive protection during their trip.
What does free travel insurance from credit cards cover?
With credit card travel insurance plans, you’re usually covered for flight related benefits such as loss of baggage. Depending on the plan, some cards also help to cover part of your cost if you happen to face flight delays.
However, when it comes to medical expenses and accidents, flight cancellations and theft, most free travel plans have little to no coverage. Or sometimes, coverage for these are covered, but only for the primary cardholder.
In some cases, the credit card travel insurance isn’t actually free.
Here’s the thing about complimentary travel insurance — sometimes they aren’t actually free. Based on the card’s requirements, you might need to spend a minimum amount on your flight or make other specific purchases before you can enjoy the perks of your “free” coverage.
What does a regular travel insurance plan cover, and how does it compare to free travel coverage offered by credit cards?
| Differences | Travel Insurance | Free Travel Insurance From Credit Cards |
| Cost | Needs a one-time payment of the premium | Complimentary when you pay for the trip using your card |
| Accessibility | Most insurance providers provide travel insurance | Only offered by certain credit cards |
| Who Does It Cover | A travel insurance policyholder can opt for family cover to ensure their entire family has coverage | Typically only covers the cardholder and in some cases, the spouse |
| Type of Coverage | Comprehensive plans with the flexibility to add coverage | Plans offer limited protection and flexibility to add coverage |
| Add-ons | Comes with optional add-ons to personalise coverage | Minimal room for add-ons to address your specific needs |
Cost
The most prominent distinction between credit card travel insurance and regular travel insurance lies in the price tag. While credit card insurance comes as a complimentary perk, you have to pay for travel insurance.
While the idea of "free" travel insurance might initially appear enticing, it's essential to delve into the details to make an informed choice. When opting for paid travel insurance, you gain the advantage of comprehensive coverage that provides protection in situations where your complimentary credit card travel insurance tends to fall short in coverage, saving you from unexpected out-of-pocket expenses.
Accessibility
The accessibility of travel insurance differs between credit card and paid plans. There are a myriad of choices for paid travel insurance from various insurance providers, both large and small.
Conversely, complimentary travel insurance plans are exclusive to credit cardholders, and not every credit card qualifies.
Coverage
A significant aspect to consider regarding your free credit card travel insurance is that most of them only cover the principal cardholder and, in certain cases, the spouse. This implies that the travel insurance benefits apply exclusively to you and not to other family members accompanying you on the trip, even if they are immediate family.
For individuals without credit card travel insurance, such as children or elderly family members, a separate travel insurance plan must be purchased.
Furthermore, credit card travel insurance only extends to the portion of the trip charged to your credit card. Consequently, if you paid for your airfare using your credit card but not your accommodation, your claim may only encompass flight-related issues and not hotel-related matters. Therefore, you are left without an option but to charge all travel expenses to your credit card.
While complementary travel insurance offered through credit cards can be a convenient perk, it may often tend to come with a fair share of restrictions and caveats.
However, when you opt for a paid travel insurance plan, like the comprehensive options offered by Income Insurance, you can enjoy more robust coverage that addresses these limitations. Income's Travel Insurance plans allow individuals to opt for family cover1, ensuring that all family members are protected during their travels.
Moreover, these plans come with enhanced COVID-19 coverage, providing additional peace of mind when you travel.
Income’s plans also include coverage for adventurous activities2 such as skiing, bungee jumping and skydiving to ensure that you're adequately protected for thrill-seeking pursuits.
You can also choose between annual and single-trip plans for you and your family. This level of flexibility and comprehensive coverage makes paid travel insurance a valuable investment, safeguarding you and your loved ones against unexpected expenses and offering a hassle-free travel experience.
Coverage Options and Flexibility
Credit card travel insurance plans are typically offered as they are, with minimal room for customisation or add-ons. This means you can't tailor the plan to your specific needs or request additional features. If crucial benefits are lacking, relying solely on your free credit card travel insurance may not be sufficient.
Conversely, paid travel insurance policies often come with multiple tiers for you to choose from, along with optional add-ons to personalise your coverage. While higher-tier plans with greater coverage will naturally incur higher premiums, the flexibility to add optional benefits to your plan allows you to tailor your insurance to your requirements.
When you’re getting yourself a travel insurance plan, be sure that it covers these areas:
Trip Inconveniences
Flight delays, missing bags, and trip cancellations — these are common problems that travellers face. Take care to check your policy’s terms and conditions, as different policies may only cover delays in certain circumstances. For instance, Income’s Travel Insurance protects you for travel delays of up to 120 hours3 for any reason4 like flight delay, train delay or delays caused by bad weather and emergency situations not caused by you — something that other insurers may not cover.
For trip inconveniences like these, it’s best to choose the most comprehensive coverage as you never know what could happen on your trip.
Medical Expenses and Evacuation
As travelling usually involves spending time in aircraft, ships or trains with strangers and eating interesting foods in foreign countries, it’s not uncommon to catch the flu or come down with food poisoning during your travels. While these may not be covered by complimentary travel insurance, regular travel insurance plans should provide coverage for medical expenses incurred when you’re unwell overseas and emergency medical evacuation.
If you have a pre-existing condition, making sure you have comprehensive travel coverage is even more important. Not all travel insurance plans cover pre-existing medical conditions5 and that's a cause for concern, especially if you worry about the possible hefty overseas medical expenses incurred with emergency medical assistance for your condition. Check that your plan includes emergency medical evacuation as well – important if your condition could require advanced medical intervention while overseas. Income’s Enhanced PreX Travel Insurance plans offer this coverage.
Choosing the Right Travel Insurance Plan: Coverage Tiers and Options
A good travel insurance plan doesn’t need to set you back by a lot. Most insurers have different tiers of coverage, with corresponding tiering in prices. Regardless of which tier you choose from, you’ll be covered from slight inconveniences to major accidents and even death. The difference between each tier lies in the amount you pay and the amount you can recoup if you are met with any of the above mishaps during your trip.
Income Insurance, for instance, offers the choice between Classic, Deluxe and Preferred Travel Insurance plans. You can also choose between buying as an individual or group, or purchasing as a family to enjoy more cost savings.
If you’re travelling with companions who have pre-existing conditions, it’s worth considering plans that provide coverage for such conditions. While these plans may cost slightly more, they offer coverage for claims related to existing medical issues, such as hypertension, which are typically excluded in most standard travel insurance plans.
What kind of coverage can Income’s Travel Insurance plans offer me?
With Income’s Travel Insurance plans, you’ll be able to enjoy comprehensive coverage that will give you a peace of mind when you’re travelling. While credit card travel insurances are “free”, they may not give you all the coverage you need whilst enjoying yourself overseas. It’s always wiser to pay a small sum to be covered rather than to rely on a free perk which might not meet your needs at all.
Final Considerations
For a worry-free travel experience, it's essential to ensure your insurance coverage is both adequate and reliable. Consider the following steps:
- Review Policy Terms: Carefully examine your credit card’s travel insurance terms and conditions to understand what’s covered, excluded, and any activation requirements.
- Consider Supplemental Insurance: Standalone travel insurance policies can help bridge coverage gaps, offering higher limits and broader protection for medical emergencies, trip cancellations, and high-risk activities.
- Consult Experts: Speak with insurance professionals to evaluate your specific needs and create a customised plan that ensures comprehensive coverage.
Your safety and peace of mind are invaluable while travelling. Don’t leave your protection to chance—choose a plan that meets your needs. Ready to safeguard your next trip? Explore Income Travel Insurance plans today for reliable and extensive coverage.
1 Family cover provides coverage for 1 or 2 adults who are spouses or partners at the time of purchase and any number of their children as long as:
- Adult(s) is 16 years and above and is the parent or legal guardian of the children
- Child(ren) is below 21 years old and is the biological or legally adopted child(ren) or ward of the adult named under the policy
- Adult(s) and child(ren) must be insured under the same policy
- Adult(s) and child(ren) must travel together if they are insured under single trip plans (not applicable for yearly plans).
2 This policy does not cover claims for loss or liability directly or indirectly caused by or arising from extreme sports which involve speed, height, danger, a high level of physical exertion, highly specialized gear or spectacular stunts, whether they are played competitively or noncompetitively, in a team or individually. Adventurous activity means any recreational activity commonly available to the public that is done overseas during your trip for leisure or as part of the tour and which:
- is undertaken while complying with all safety procedures, such as wearing safety equipment and following rules and regulations; whether specifically advised or generally expected of a reasonable person,
- where guidance and supervision of licensed guides or instructors are available, the recreational activity must be carried out
under the guidance and supervision of licensed guides or instructors of the tour operator or activity provider, and
- is not excluded under the general exclusions listed in part 4 of the general conditions of the policy.
3 We will pay you for travel delay if the public transport you are scheduled to travel in during your trip is delayed for more than six hours in a row and is not caused by you.
4 Except those caused by the insured. Policy Ts&Cs apply.
5 We do not cover claims arising from a pre-existing medical condition where you have been given a terminal prognosis with a life expectancy of under 12 months. Please refer to policy conditions for the precise definition of pre-existing medical conditions.
This article is meant purely for informational purposes and does not constitute an offer, recommendation, solicitation or advise to buy or sell any product(s). It should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. Please seek independent financial advice before making any decision.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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