Credit card companies now offer free travel insurance with some of their high end credit cards. This is known as complimentary travel insurance and it could save you hundreds of dollars in travel insurance each year, but there are a few things you should know before using one. Below are two of the most common questions asked about credit card travel insurance.
Is credit card travel insurance really free?
While credit card complimentary travel insurance is technically free, the insurance
premium is partly covered by the credit card’s annual fee, and you are often required to pay for part of your travel expense, such as flights or hotel, with your credit card to be eligible for the free credit card travel insurance.
Are credit card travel insurance comparable to standalone travel insurance?
According to Credit Card NZ, a New Zealand Credit Card comparison website, in most cases credit card travel insurance are comparable to standalone multi-trip annual travel insurance, if not better.
Like anything in life, credit card travel insurance does have some drawbacks worth
pointing out. Below are a list of the pros and cons of credit card travel insurance.
Pros of credit card travel insurance
1. More cost effective: These policies are often more cost effective compared to standalone annual travel insurance.
2. Saves time: It saves you time trying to find a suitable travel insurance for each trip or each year.
3. Multi-trip cover: It covers you for multiple trip to multiple countries unlike some standalone travel insurance.
4. Premiums do not increase with age: Unlike standalone insurance your premiums do not increase with age.
5. Covers Spouse/Partner and Kids: Your spouse and kids are often covered if traveling with you and you pay for part of their travel expense wit your credit card.
6. Covers Domestic travel: Many credit card travel insurance also cover domestic travels.
Cons of Credit Card Insurance:
1. Cover varies for each card: You need to read the terms and conditions of each card and the type and level of cover varies from one card to another.
2. Required Activation: Activation of credit card travel insurance is not automatic and varies from card to card, and in most cases you’ll have to activate your travel insurance each time you travel. This often involves paying for your flights and accommodation with your card to activate your travel insurance.
3. Only covers your spouse and kids when traveling with you: If your spouse and kids need to travel without you, you will need to get standalone travel
insurance for them although some cards allow you get an extra card for your spouse which gives them coverage without you.
4. High interest rates: Complimentary travel insurance are often only found on premium cards, which tend to have higher interest rates.
5. Exclusions apply: Some credit card travel insurance policies come with exclusions. They may not cover certain activities considered more dangerous
such as extreme sports, or even skiing or water sports, etc.
How to choose the best credit card travel insurance for yourself
It pays to shop around when considering credit cards that offer complimentary travel insurance policies. As we’ve seen, coverage can vary from card to card, and some might not offer extensive cover compared to standalone travel insurance.
Be sure to read the Product Disclosure Statement carefully before you signup. This is
where you’ll find all the information on what’s covered or not covered by the card’s travel insurance. You’ll find information on policy limits, exclusions, activation policies and more.
Does it fit your lifestyle?
Look for a card and travel insurance policy that fit your lifestyle and circumstances. For instance, complementary insurance is usually offered only on premium cards, where you may find higher interest rates and annual fees. Look for cards with the lowest rates and annual fees.
Make sure you understand the activation process
The activation process varies from card to card, so be sure you completely understand how your policy is activated before you travel. It is highly advised that you call your credit card provider to confirm that you would be covered for your trip before you set off.
Read the cover details
Know and understand what the complimentary travel insurance policy covers. How does it handle luggage claims, trip cancellations, medical coverage, etc. Thoroughly read each policy’s disclosure statement.
Shop around for the best travel credit card to suit your needs. Use a credit card comparison website to help make this process easier. Credit card comparison websites make the process of comparison easier and they tend to be more transparent when it comes to rates and fees.