Travel insurance claims

Taking health insurance is part of going abroad, but watch when you choose to make small claims.

Travel Insurance policies have become an part for every person going abroad. Many do so through the year and this has meant an increased level of importance for travel insurance policies. Such a policy helps in avoiding unnecessary expenses on healthcare during travel; most people accustomed to medical insurance policies in India often find they pay a heavy price for the claims made on such overseas policies.

INTERNATIONAL TRAVEL POLICY
An international travel insurance policy covers medical expenses of the individual when abroad. This will also provide for compensation in an accident and this policy can be taken for specific countries a person is visiting. There are separate policies for the US, as the medical infrastructure and accompanying conditions there are different. Apart from reimbursement of expenses on various medical treatments, such policies also cover a wide range of other expenses like dental treatment, loss of passport benefit, checked baggage loss benefit and so on. These ensure total coverage from the time a person begins the trip till the time they return home.

CLAIMS
There are a lot of areas where some claim could arise due to conditions faced under several situations. This could result in a position where it might be tempting for the individual to make some claims, but this may turn out to be a mistake. The individual might not actually get a net benefit and may end up paying a large part of the expenses themselves. And this will be in addition to the premium paid to the insurance company when taking the policy. This might come as a shock for a lot of people but here is the reason why this could well happen.

DEDUCTIBLE
This entire situation occurs since there is a term called deductible present in the travel insurance policy. The deductible is a condition whereby the policy holder would share in the losses of the insurance company related to the policy up to a specified figure. Whenever a payment has to be made by the company, a specified part will have to be made by the individual policy holder. For example, if there is a deductible of $150 and you make a claim of $300, then only half the claim of $150 will be paid by the insurance company. In this case, if the claim is for a sum of $100, then the entire lot will have to be paid by the policyholder.

In case of a large expense, the deductible might not be significant because this is usually something like $100-200 on specified items. So, if a person has a medical expense of $5,000, then the figure of the deductible might be small. In fact, for the major expenses, often there is no deductible present. However, the situation changes when it comes to small expenses.

The deductible is likely to be a significant part of the expense when the latter is small. For example, consider where a person has a policy that covers $100,000 of medical expenses in the US. This policy also covers the dental expense and the deductible is $100. If a person goes for a dental visit or some treatment with a dentist in the US, then the expense could come to $200. This might seem very significant when it comes to the Indian traveller, because it will be around Rs 10,000 when converted to rupees. However, the insurance company will pay only $100 of the expenses, while the remaining $100 will have to be paid by the holder. So, apart from the premium, an additional Rs 5,000 would have to be paid by the individual.

This kind of deductible is present to ensure the policy holder does not make small claims that will be difficult for the insurance company to service. Since this amount has to be paid by the holder, they would be better off not making the claim in several cases. In such a situation, there has to be a careful evaluation of when the claim should be made and when not.

The writer is director, My Financial Advisor