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. 

1 comment:

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