Thursday, November 28, 2013

Travel Medical Insurance Analysis

To buy or not to buy medical travel insurance when traveling outside of Canada?  That is the question.  Comprehensive medical travel insurance can be pricey considering that the chance that you will actually need it while on vacation is not high.  However without it, the financial impacts could be catastrophic if you do end up getting sick enough to require medical attention, or worse yet, are injured in an accident.  According to market research reports, a hospital stay in the United States averages almost $4000 per day.

Travel insurance is offered by all the major banks, some insurance companies like Manulife Financial,  and other companies like Blue Cross and CAA.  Luckily all of these companies support an online quote for easy comparison, provided that you are under a given age limit which varies from 54 to 74 depending on the organization.  If you exceed that age limit, you may be asked to fill in an online medical questionnaire or to phone for a medical interview before you are provided with a quote.  If you answer positively to any of the medical conditions of an online questionnaire, then again you may need to phone for coverage.  It's interesting to note that if you answer negative to all the online medical questions, in some cases you may actually get a slightly lower premium.  This is because you will not be covered for any illness that is deemed related to the conditions that you denied having, so the risk of payment is much less.

We will both be 50 next spring and plan to travel to France for just under seven weeks.  Since we are well below the age limit set by any of the travel insurance providers, we were able to get a good comparison of rates and benefits.

For our criteria, the coverage benefits and exclusions were comparable and the main difference was price of the premium.  It seemed irrelevant whether our maximum overall medical coverage amount was $1 million or $5 Million for expenses that could include ambulance, paramedic care, hospitalization, private nurses, physio, chiropractors, drugs, dental and a one-way flight home if required.  Even the smaller limit seemed more than sufficient.  Different policies may put a maximum cap on certain types of expenses, such as $2000 for emergency dental work but they were all quite similar.  Each organization has a different criteria for the duration that you need to be stable from a pre-existing condition, ranging from 3 months to a year, depending on age of the applicant.

It is important to read the complete policy details to get a clear picture of what is covered, and more importantly, what is excluded.  There is a link to a sample policy on each of the websites, but often you have to really hunt for it.  Examples of areas where you need to clarify coverage for a given policy include the definitions of "stable period for a pre-existing condition" and immediate family.  In some policies, certain activities deemed as dangerous such as scuba diving may be excluded.  Each insurer may have different criteria for how soon you need to contact them prior to or after receiving your medical treatment. Not thoroughly understanding the specific terms could lead to minimizing or invalidating your coverage.

Based purely on price, the cheapest policies for our 48 day trip would be to go with TD Bank ($265) or Manulife ($279).  Manulife had the extra option of specifying a deductible in order to further reduce the price.  Adding a $500 deductible per person reduced our premium to $235.  This seemed worth the risk since the $500 would not bankrupt us, and the chance of our needing to use it was not high.

Our next consideration was regarding Trip Interruption Insurance.  We currently have four elderly parents, all closing in on age 90.  If one of them passed away during our 7 weeks abroad, it would be quite expensive to get an emergency flight home for the funeral and then back again to resume our trip.  However trip interruption insurance is extremely expensive and often doubles the premium.  And upon reading the fine print of what trip interruption insurance covers, it only flies you home but will not pay for you to resume your trip.

Manulife and Bank of Nova Scotia (which seems to use Manulife under the covers) offer something called "Bounce Back" protection.  On the surface, this option provided exactly what we were looking for–it would pay for you to fly home in case of death of an immediate family member, and then pay for you to return to resume your trip.  It was not even that expensive, at an extra $55 per person, compared against the thousands we would pay in airfare on our own.  However, the extensive exclusions in the policy rendered this option ineffectual for us.  It excluded any family member that was in poor health prior to trip departure or resided in a long term care facility, which included retirement homes.  This basically excluded most of our parents.

At the same time that we were doing all this research, we were also considering upgrading our CIBC Dividend Visa card to the CIBC Dividend Infinite Visa.  Our original card gave us up to 1% cash back, while the additional card gave up to 2% on a tiered spending level.  We had calculated that based on our regularly spending pattern, we would get more cash back with the Infinite card, even after deducting the $109 fees.  But this particular card also provided a slew of travel benefits including travel medical insurance for trips up to 15 days, flight delay and baggage loss, car rental collision, and trip interruption!

With this card, we will may not get a full bounce back, but at least we get trip interruption (one way fare home) for free.  Since it provides 15 days of medical insurance per card holder, we would only have to buy extra medical for the remaining 33 days (or 34 days to provide a safe overlap, just in case).  This would bring the travel insurance medical coverage for our 48 day trip down to $166.  So finally, we have settled on the best solution for our needs. 

Sunday, November 17, 2013

Cell Phone Plans - Revisited

It was too good of a deal to last forever.  In our book Retired at 48, we described our cell phone usage pattern as data heavy-voice "lite".  We rarely use the phone to make or receive phone calls or texts, but we do use the email and internet features daily.  The pay-as-you-go plan with data add-on option from 7-Eleven SpeakOut Wireless was perfect for our needs.  After buying a $10 SIM card, you can add air time (spent at $0.25/minute talk and $0.10/text) to your unlocked cell phone in denominations of $25-$100 and the additional minutes last for 365 days as opposed to the standard 30-60 days.

But even better was the data add-on of $10 per month for unlimited usage.  This is the part that was too good to last forever, and it hasn't.  SpeakOut has changed its pay-as-you-go data add-on to $10 per month for 100MB with additional usage charged at $0.10/MB.  There is no option to buy a larger add-on for more data with the pay-as-you-go plan.

An alternative is to abandon the pay-as-you-go plan and buy a SpeakOut Value Plan instead.   The cheapest value plan costs $20 for 100 talk minutes per month (way more than we ever use) and allows you to choose data add-ons of 500MB for $15 or 1GB for $25.  So our monthly cell phone fees would go up from about $12 to around $35-45 depending on our data usage.

Our first instinct was to repeat the price comparison analysis which we described in the book, to determine if we should change providers.  For our new analysis, we used 10 minutes talk time, 500MB data and the voicemail feature as our monthly requirements.

What we quickly realized is that for our usage pattern, Speakout is still the most inexpensive option for us.  Most of the other providers forced you to buy a pricier plan in order to get 500MB of data.  Wind Mobile came close with its $30 plan that offers unlimited data.  But Wind charges $8/month for voicemail and is not an official Apple Supplier, which is no good for us since we own an iPhone.  We are also concerned about the breadth of Wind's coverage area.

Our 500MB data requirement was just an estimate.  We really don't know how much data we use monthly on our cell phone, because up to now, our data was unlimited so we didn't keep track.  Since we mainly use our phone to check emails, it is possible that our usage will fall within the 100-350MB limit.  If this is the case, then we could stay on the pay as you go plan with the $10/100MB add-on and pay the $0.10/MB for up to an extra 250MB before we reach the $35 cost of the value plan.  We will try this pay-as-you-go with 100MB data add-on option for a couple of months in order to gauge what our real usage is.  We can then decide whether or not to switch to a value plan.

One consideration that influenced our decision was our desire to upgrade our iPhone 3GS to a newer iPhone model. An unlocked iPhone 4S is selling for $450 at the Apple Store while the 5S is $719.  Our plan had been to buy the 4S and stay with the SpeakOut, but since we were reevaluating cell phone plans anyways, we considered selecting a locked in plan for 2 years in order to get a 5S for $229.  There was a Bell Lite plan at $55 month that provided 500MB of data and 1000 talk minutes.  The $20 difference in monthly cell phone fees for two years would be offset by the $490 discount on the newer phone.  But when we called to confirm, we found out that the discount was only for the Bell Plus plan which was $80/mth!  The discount on the 5S for the Bell Lite plan was a mere $50.  Who would willingly lock into a plan for 2 years to save $50?!?   Then we considered buying the 5S anyways while staying with SpeakOut.  This was also not possible because currently SpeakOut does not support the new nano SIM card that the 5S requires.

So finally our decision was made.  We would buy an unlocked iphone 4GS, stay with our current pay-as-you-go plan and add the $10 for 100MB feature.  After a few months, if we find we are regularly using more than 350MB per month, we will switch to the appropriate SpeakOut value plan.