Travel light with the right insurance plan

By Lorna Tan

Head, Financial Planning Literacy

If you’ve only got a minute:

• A suitable travel plan offers great peace of mind, and it has been indispensable when I meet with emergencies during my travels like delayed flights while flying from New York to Singapore, lost baggage in Paris, medical crisis, and so on.
• The cost of your travel insurance will depend on several factors, including your age, destination, length of your trip, and the level of coverage you choose, and it is prudent to shop around as benefits and premiums vary across insurers, partly because of discounts during promotional periods.
• Buy your travel insurance once your trip is confirmed, after shopping for a suitable cover preferably from a reputable insurer which provides 24-hour assistance and the ability to process claims quickly.

This article was first published in The Business Times.

Many of us are ready to hit the road now that the school holidays are here - but don’t forget to line up travel insurance. It’s easy to disregard the cover amid the excitement of planning a dream vacation, but it could be a costly mistake as unforeseen circumstances can disrupt any well-planned trip, turning it into a nightmare.

Over the years, I’ve realised that a suitable travel plan offers great peace of mind. While it is a cover that I hope I never need to claim from, it has been indispensable when I meet with emergencies during my travels. They included delayed flights while flying from New York to Singapore, lost baggage in Paris, cancelled flights at Schiphol Airport during the Covid-19 pandemic, and when my mum fell and needed stitches for her wound during a day trip in Batam.

My latest travel claim was for a cancelled tour to South America in December last year. My hubby and I had bought the package tour (21-day Impressive South America Tour) at a travel fair a few months earlier in July 2024 and paid a deposit of $8,000 ($4,000 each). The trip was supposed to start on 21 December and end on 10 January this year.

In early November, we paid the tour cost in full. Including the paid deposit, the tour package cost amounted to about $40,000 ($20,000 per person). Unfortunately, my father became critically ill from kidney failure in late November and his prognosis was poor. We had to cancel the tour.

The terms of the tour package stated that the cancellation charge of the tour booking would vary depending on the period of cancellation notice. In my case, I was cancelling the tour within 21 to 34 days prior to the departure date. Under this scenario, the cancellation charge was “$500 or cost of air-ticket whichever is higher”. If I had cancelled the tour 3 days and less prior to departure, the cancellation charge would be 100% of the tour fare.

In my case, the tour cancellation fee amounted to $22,000 ($11,000 each) for my hubby and me. It included the air-tickets for the return flights to South America as well as the various flights during the tour which the tour agent explained are non-refundable.

To claim from my travel insurer, Income Insurance, I had to submit a letter from my father’s doctor to describe his medical condition. Other documents that were required as part of the claim process included a letter from the tour agency stating the cancellation fees incurred.

I have an annual travel policy while my hubby has a single travel plan which I had bought for him immediately after signing up for the tour in July. The trip cancellation limit under each plan was $10,000. The cancellation of trip limit would be a higher $15,000 if we had bought the higher-tier travel plan with more benefits, but of course the premiums would be higher, too.

Thankfully the claim process was relatively painless and quick. I managed to successfully claim the amount of $20,000 ($10,000 each) for my hubby and me. Subsequently, the tour agency refunded the balance of the tour package cost (about $18,000) to us. If my hubby and I had no travel insurance for this trip, our financial loss would have been $22,000 but we managed to recover $20,000 from the insurer.

Read more: Should you get single or annual trip coverage?
Find out more about: DBS TravellerShield Plus

What does travel insurance cover

With growing awareness of the importance of travel insurance, more people are buying such a cover for their trips, with regular travellers – like myself – opting for annual policies. In a nutshell, travel insurance protects you from unexpected financial losses and acts as a safety net, covering costs relating to medical emergencies, trip cancellations, lost luggage, theft, insolvent tour agency, and more.

The cost of your travel insurance will depend on several factors, including your age, destination, length of your trip, and the level of coverage you choose. It is prudent to shop around as benefits and premiums vary across insurers, partly because of discounts during promotional periods. Besides Income, I have bought travel insurance from Chubb, DirectAsia, and Sompo.

Here are 3 considerations.

1. Policy coverage and exclusions

You should look at the types of benefits and coverage which are most important and relevant to you, and consider any exclusions and claim limits for each benefit.

For instance, if you have hypertension, heart conditions, asthma, diabetes and eczema, you may wish to buy travel insurance that comes with a cover for pre-existing medical conditions. This is because such conditions are usually excluded in standard travel plans. This means that if you have a pre-existing health issue and require medical attention on your trip, standard policies may not cover the related expenses. 

If you are planning adventurous or risky activities such as mountain climbing, check if the policy is comprehensive enough to cover such activities and the altitude limit for leisure trekking.

In addition, travellers going on a self-drive trip should look for a cover that offers rental vehicle excess coverage.

Insurers are constantly improving their products to provide maximum protection. Some new changes include complimentary telemedicine consultation services, where you have access to medication recommendations and translation for local pharmacies from a licensed doctor if needed.

Another new improvement includes cover for unused prepaid expenses (like entertainment/theme park tickets and day tours), lost frequent flyer miles and hotel loyalty points, on top of transportation and accommodation expenses. And for an additional premium, you can be compensated for flight delays of just 30 minutes.

Read more: Insure your travels for peace of mind
Find out more about: DBS Travel Marketplace

2. Medical expenses, evacuation and repatriation

Singaporean travellers who are used to the quality of care here, may end up opting for foreign-run hospitals or clinics when they require medical care in some parts of Asia. Such treatment would likely cost more than the same treatment at a public hospital.

Higher medical expenses coverage is also recommended for travel to countries such as Japan, Europe and the US where medical treatment costs are higher.

Do note that medical expenses overage extends even after your return to Singapore, subject to a cap, for continued medical treatment.

Some people may overlook how high the cost of evacuation can be. Depending on the country you are evacuating from, it can run to hundreds of thousands of dollars.

Insurers may provide unlimited coverage or a $1 million limit, to cover the high costs of providing conveyance, accompanying doctors or nurses, medical supplies and third-party expenses to transport an insured person home or to a better equipped hospital for treatment. This also covers the costs involved in transporting the policyholder’s body to his own country after he has died during the trip.

3. Buy travel insurance as soon as you book your trip

In the past, I was guilty of buying travel insurance online just before the plane takes off. But waiting until the last minute to do so leaves you uncovered for any unexpected events leading up to your trip. They include trip cancellation due to natural disasters, unexpected outbreak of strikes, riots and civil commotions, any unforeseen illness of the insured, their family members or travelling companions, and financial collapse of travel agency.

Buying travel insurance once your trip is confirmed doesn’t usually increase the cost, and it provides immediate coverage.

Read more: 10 money management tips for your holidays

So, don’t delay securing your peace of mind when you can purchase insurance seamlessly after shopping for a suitable cover, preferably from a reputable insurer which provides 24-hour assistance and the ability to process claims quickly.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.