Should you get a single-trip or annual travel insurance?

Annual travel insurance may be an obvious choice for the most frequent business travellers , for most of us, it is difficult to know if we travel enough to 'break even' buying annual travel insurance. To start, let's understand the core differences between annual and single-trip insurance.

Travel insurance: Annual vs single-trip

Annual travel insurance, is an insurance policy where after a one-time payment, it covers an unlimited number of trips within 12 months.

In comparison, a single-trip travel insurance, as its name suggest, only covers a single trip, though at a cheaper cost than an annual policy. However, there are many great reasons to get an annual travel insurance plan.

Advantages of annual travel insurance

Convenience

One reason to get annual travel insurance that some may appreciate is the convenience of not having to purchase an insurance plan for every trip. This may be useful for those of us who are liable to either forget to purchase travel insurance, or to go on spontaneous holidays.

Efficient coverage of trips

One advantage of annual travel insurance that often slips people's minds is that for shorter trips and holidays, an annual travel insurance plan often covers these trips more efficiently. For example, most single-trip travel insurance policies cover you for 180 days.

That means that on a three-week (21-day) trip you're left paying for 159 days of coverage that you did not use. On the other hand, an annual policy will generally cover trips up to just 90 days, which is still more than enough for most people.

Therefore, if you are able to make enough trips to break even on an annual travel insurance policy, it will cover your trips more efficiently than single-trip plans.

Things to consider when choosing travel insurance policies

When selecting your choice of policy, there are some needs for your travels that you should pay special attention too.

Regions covered

Often, annual travel insurance plans will give you the option to pay a cheaper premium in exchange for limited geographical coverage to allow you to balance your costs. It's therefore important to plan your travels with this in mind, specifically that your stopover locations are covered.

It's recommended that your policies cover a reasonable number of regions around where you intend to travel as a safeguard against any unexpected changes in stopovers.

Mode of travel

Unfortunately, not all transport is made equal, particularly cruises. Cruises often come with extraordinarily high medical and evacuation expenses.

As such, compared to travelling by plane, you'll have to ensure that your policy has an appropriately high coverage limit when taking a cruise.

Adventurous activities and sports coverage

Adventurous activities such as mountain climbing and skydiving are often not covered with lower costs policies. Whilst there are policies which cover these activities, they charge a high premium that you should factor into your budget when planning to do activities that are considered more dangerous.

Pre-existing conditions

Pre-existing medical conditions can affect your insurance options. These conditions include conditions such as: asthma, diabetes, eczema, epilepsy, hypertension (high blood pressure) among others. If you have a pre-existing condition, make sure that any complications with that condition are covered.

How should I decide if annual travel insurance is for me?

A good rule of thumb to follow about annual insurance is that if you take more than five short trips overseas a year, an annual travel insurance policy will certainly be worthwhile, often either business travellers or those with family members overseas will fit into this category.

However, if you'd like to take a more scientific approach to understanding what travel insurance type is best for your use case, that requires a little more effort.

First off, you have to consider the factors discussed earlier to determine the type of coverage you need. This is by far the most important step, as there is a vast variation in the costs of the insurance depending on what coverage you require.

Annual travel insurance can range from around S$200 to well over S$1,000 per year (worldwide coverage), whilst some single-trip plans can have premiums as low as S$24.

Once you have a grasp on the costs of single-trip and annual policies that give you sufficient coverage, deciding between them becomes much easier.

Conclusion

Though an annual travel insurance plan is not for everyone. Many travellers certainly travel enough to make the most out of these plans and make savings.

While searching for the right plan for you, remember to keep in view not only the itinerary of your trip but your own health and safety in mind and be sure that you are sufficiently covered.

ALSO READ: 4 things your travel insurance does not cover

This article was first published in ValueChampion.