Is it necessary to buy travel insurance?

Travel insurance sounds like something meant to fleece kiasi people of their hard-earned cash. Many of us pay for travel insurance before we get on that plane. But why don't we buy travel insurance when we go to JB or Malaysia for a massage?

Heck, you're more likely to get into an accident dodging angry drivers on the AYE or PIE than strolling the streets of Tokyo or Paris.

In addition, if you have a medical insurance policy here in Singapore, you might recall your agent having told you something about being able to make claims for overseas medical costs.

For every cautious, over-insured traveller you'll meet, you'll find a footloose and fancy free backpacker who "don't believe" in insurance. So, is it necessary to buy travel insurance?

1. Travel insurance covers emergency situations

Most people don't think twice about what goes into that plate of char kuay teow. Neither do they think about what they're actually paying for when they buy travel insurance.

Here are some of the basic coverage you'll be able get from most travel insurance plans.

Overseas emergency medical costs

One of the biggest reasons to buy travel insurance is because it protects you if you need to seek urgent medical help when on holiday.

Singaporeans seem to have the habit of getting into road accidents overseas, which is understandable considering so many of us have driver's licences we never get to use because of COE.

Then there's the risk of getting food poisoning after stuffing your face at one too many hotel breakfast buffets, or walking into a wall and breaking a tooth.

Your medical coverage usually lets you make claims for medical or dental costs incurred, medical evacuation and/or expatriation if you need to be rushed back to Singapore, hospital cash benefits and more.

You are also usually allowed to make claims for medical expenses incurred upon your return to Singapore if they are due to an illness or accident sustained while overseas.

Personal accident and death

We're not trying to be pessimistic, but there is always the chance your trip will end in disaster.

Travel insurance policies have a personal accident component, which will offer you payouts if you get into an accident and as a result are temporarily or permanently disabled, or die (in which case the money goes to your family or whomever you've willed your estate to).

Your policy will indicate a lump sum to be paid out if one of the above catastrophes takes place, and the percentage of this lump sum you'll receive.

A typical sum in a standard plan might be $150,000. If you die or are totally and permanently disabled, you or your family might receive 100 per cent of the sum, while losing one limb might entitle you to just 50 per cent.

Travel inconveniences

Unless you're really unlucky, you will not exactly be using our medical or personal accident coverage on every trip.

But if you're a frequent traveller, sooner or later you're going to have a chance to make a claim for travel-related mishaps and disruptions.

Cancellations, delays or missed connections can allow you to make claims, not only for planes but also for train and bus rides.

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Obviously, your alarm not going off is not a good enough excuse-you'll have to demonstrate the disruption was caused by an illness, injury, death in the family or an event like a natural disaster or civil disturbance.

Baggage delays can also entitle you to claim money. How much you get typically depends on how many hours your baggage is delayed by.

In principle, you are also entitled to claim money for lost or damaged items.

However, be warned that it can be tricky to actually get your money in such situations, as you are generally required to make a police report at your destination, and in many countries, the police might not be willing to issue reports for something as trivial as a lost iPhone.

In addition, there are pretty tight limits for each category of items. So don't wear your diamond-encrusted Rolex watch on your trip if your limit for watches is only $200.

In a nutshell, travel insurance should cover you for…

• Medical costs incurred overseas and upon your return, including hospital stays
• Costs of evacuation and repatriation if you need to be sent back to Singapore
• Compensation for travel delays or disruptions that aren't your fault
• Compensation for cancellation of your trip
• Compensation for delayed luggage
• Compensation for loss of personal belongings or money, including lost luggage and passports

Unfortunately, you probably won't be allowed to make claims for millions if you decide to see some celebrity doctor.

Insurance companies usually require you to seek treatment from one of their approved doctors and hospitals, and there are limits on how much you can claim.

So, make sure you don't take liberties when incurring costs.

2. Travel insurance also covers pre-trip emergencies

Most people have no idea what travel insurance actually covers when they book it, which also means they might miss out on making claims they're actually entitled to.

You're covered by travel insurance from the minute you book your policy until you arrive at home and have collected all your belongings.

This means that if anything happens to prevent you from going on your trip after you've booked the tickets, you might be able to claim compensation.

You are obviously covered as you travel from Singapore to your destination.

But the protection continues in some ways after you land in Singapore at the end of your vacation as well.

If your luggage gets lost on the way back, despite the fact that you can very easily just go back home where you have all your clothes and necessities waiting for you, you can still get compensation for the delay if it's long enough.

3. Regular health insurance doesn't fully cover travels

For many people, it's the medical component of the travel insurance policy that they're the most concerned about. Sure, it might be annoying to have to wait for a delayed flight or have your luggage delayed, but neither of them is going to bankrupt you.

And if you already spent one entire afternoon with your insurance agent trying to pick a medical insurance policy, why do you still need travel insurance?

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If you have a medical insurance policy, it's likely you'll be able to make some claims for medical expenses incurred overseas. But you'll have noticed that your existing policy contains some gaps that will end up in your having to fork out money.

If your medical insurance policy covers you only if you stay at least one night in a hospital, you might be out of luck if you have to see a doctor for emergency treatment that doesn't warrant a hospital stay.

For instance, while you might just stay home for a few days to recuperate back in Singapore, having a fever can wreck your entire holiday if you don't see a doctor for medication.

Furthermore, while a visit to the polyclinic in Singapore might cost just $10, without the time to rely on an overburdened healthcare system overseas, you might find yourself paying top dollar for private healthcare.

If you are travelling to a remote area, falling sick or getting into an accident may mean being evacuated by helicopter or something similarly dramatic, or even flown back to Singapore. The cost of evacuation and repatriation is often not covered by traditional health insurance plans.

Basically, the crux is that there are certain things travel insurance covers that medical insurance doesn't. And while the likelihood of these things happening is very remote, the costs can be insane.

4. Travel insurance isn't cheap

Travel insurance in Singapore mostly automatically Covid-19 coverage these days. And that could only mean one thing - travel insurance is more expensive these days, post-Covid.

Here is a summary table of popular travel insurance plans' premiums these days:

Travel Insurance	Premiums (Worldwide/week)
FWD Travel Insurance	$42 – $73 (Covid rider not included)
NTUC Travel Insurance	$137 – $195
AIG Travel Insurance	$68 – $132
AXA Travel Insurance	$98 – $126
MSIG Travel Insurance	$117 – $201
Singlife with Aviva Travel Insurance	$75 – $161
DBS Chubb Travel Insurance	$171 – $280
Great Eastern Travel Insurance	$99 – $118
Sompo Travel Insurance	$103 – $132
AIA Travel Insurance	$75 – $123
Etiqa Travel Insurance	$65 – $106
Direct Asia Travel Insurance	$69 – $94 (Covid rider not included)
Citibank Travel Insurance	$83 – $105 (No Covid cover)
Tokio Marine Travel Insurance	$68 – $88
UOB Travel Insurance	$75 – $123
OCBC Travel Insurance	$78 – $138

5. I'm travelling on budget, I don't need travel insurance

When the travel bug bites but you're so broke you need to take the MRT to Changi Airport the night before to catch your 5am flight, it's tempting to travel in extreme budget mode.

Some of your extreme budgeting measures might include staying in hostels infested with sweaty, hormonal teenagers, treating convenience stores like restaurants, trying to trick the museum staff into thinking you're young enough to receive the student discount and going without travel insurance.

All of the above are pretty much harmless except that last option.

The trouble is that, nine times out of 10, skipping travel insurance seems like the easiest way to save money because, unlike swatting away a cockroach in your one-star hotel room, you don't actually feel any difference-until you need it and it's too late.

6. What could possibly happen? I don't need travel insurance

Have you ever wondered what could possibly happen if you didn't buy travel insurance? Would you suddenly be able to see ghosts or would the world become bathed in psychedelic colours?

Well to be honest, most of the time, nothing will happen. But if you're really unlucky, here are five situations that will have you shaking your fist at the sky:

Delayed or lost luggage

You might have painstakingly packed the chicest outfits you own for your debut on the streets of Paris, but all of that goes to the dogs if your luggage gets delayed or, worse, lost.

Sure, it's not a life or death situation, but when you're stuck in a foreign destination with only one set of underwear, it's going to feel like the end of the world.

Especially when you consider that insurance payouts for delayed baggage can be quite generous.

A few years back, my luggage got delayed by half a day when I was on the way back to Singapore. It was no biggie to me, since I had everything I needed at home anyway.

But thanks to my travel insurance, I got somewhere in the region of $500. I would have kicked myself for not buying insurance purely because I would have lost the chance to earn $500 for doing absolutely nothing.

Dental emergency

If you come down with the flu, a bit of downtime at the hotel can be the best cure.

But when it comes to dental emergencies, whether you're suffering from a broken tooth or a toothache, not seeing a dentist asap could either mean ruining your trip completely or looking like crap in all your holiday photos.

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Every time I fly to another country, I always buy travel insurance. Except this one time when I was in Jakarta and I walked into a glass panel and chipped a tooth (true story, unfortunately).

Don't ask me how it's possible but between getting my leave approved and packing for a last minute trip, I completely forgot to buy insurance That. One. Time.

It wasn't a serious accident so I waited till I was back in Singapore two days later to visit the dentist. It cost me $200 to get the tooth filled, money that I could have claimed from the insurance company if only I'd remembered to buy insurance.

I'm still kicking myself because I've been buying travel insurance for years but the one time I forgot I could actually have used it.

Missing your connecting flight

If you're a frugal traveller, I'm willing to bet you've found yourself trying to sleep at an airport at least once in your life thanks to the inconvenient layover on the discount air ticket you booked. It's not fun.

Miss your connecting flight due to a prior delayed flight and your holiday might turn into a nightmare at the airport.

You can get quite a generous sum of money for suffering a missed connecting flight. The travel insurance company will usually cover the cost of accommodation and meals as you await the next available flight. This can add up to a few hundred dollars.

Sure, it's not a matter of life and death. But when your fellow passengers are checking into a cushy hotel for the night and you're stuck trying to make a bed out of the cold, hard airport floor, don't say we didn't warn you.

Getting pickpocketed

If you aren't exactly the most street-smart of travellers, you might need travel insurance in case you get robbed or pickpocketed.

About a decade ago, I went to Spain with three friends. As four clueless Singaporean teenagers running around excitedly, we were sitting ducks.

One friend got pickpocketed within five seconds of arriving in Madrid, the other lost a few hundred Euro thanks to a wily conman masquerading as a police officer.

Travel insurance usually covers you for theft, not only of money or personal belongings but also travel documents such as passports.

It's especially important that you be insured for loss of your passport, as it can cost a lot of money and extra hotel stays to get a new one.

Medical emergency

Perhaps, the biggest "what ifs" of all is this - overseas medical emergency. I've known of a friend of friend who got diagnosed with terminal cancer while travelling abroad.

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She was deemed unfit to fly and was stuck overseas. The only way the hospital allowed her to fly was via emergency medical evacuation - with doctors and equipment all that brought up with her in the skies.

How I knew? The entire circle of friends were spamming crowd funding fundraiser links all over social media.

Then, I got to know the quoted medical evacuation bill was $200k and upwards. If she can't fly, she can't afford treatment there either. She can't even make her way back to Singapore if she (touch wood) prefers to pass on at home.

That story will forever be etched in my head. Buy travel insurance with overseas medical expenses coverage and emergency medical evacuation.

7. I still refuse to buy travel insurance, how?

It's ok if you don't believe in travel insurance, really. Your money is yours and no one can tell you what to do with it.

In the event if you're travelling without travel insurance, here are some travel tips we have:

• Avoid check-in luggage: Don't pack any check-in luggage! No luggage, no stress. Instead, put everything you feel you need into your carry-on bag. Only the essentials, and never let that bag out of your sight. Buy whatever non-essentials you didn't bring at your destination.
• Arrive at the airport a couple of hours early before your flight: Reach the airport early before you're scheduled to fly off. That way, you'll have more than enough time to book an alternative flight or consider other options as soon as you find out that your original flight is delayed or cancelled.

That's all, really. Medical emergencies and accidents? Pray.

8. Get cheaper travel insurance with promotions

Not all travel insurance policies are created equal. This means that if you don't want to pay too much, you can opt for a more basic plan that costs less.

This means the maximum amounts you can claim in each category will be lower. You also won't receive coverage in certain areas such as pre-existing health conditions.

Otherwise, always seek out promo codes and existing travel insurance promotions before you click "Buy". These travel insurance promos usually run throughout the year.

You'll always find a pretty good 30 per cent or 40 per cent discount off premiums.

Getting travel insurance for a week-long trip costs the same amount as one or two touristy souvenir t-shirts. And you'll probably look better without the t-shirts anyway.

This article was first published in MoneySmart.