Free travel insurance is a benefit that comes with many Australian credit cards. This can be a handy feature if you’re travelling overseas and need basic insurance coverage. But does credit card travel insurance go the distance, or is it wise to purchase a separate policy?
Credit card companies are able to offer free insurance to credit card holders by purchasing one-size-fits-all policies from insurers in bulk. These policies are provided by third parties and are designed to cover the basic needs of most travellers. But, as these policies are bought in bulk, and to keep costs down, they won’t necessarily cover everything that you need.
That’s not to say that you should not use credit card travel insurance – after all, it’s a free benefit. But it is vitally important to read the Product Disclosure Statement (PDS) carefully to ensure you’re covered for your personal needs and the activities you’re doing. Even among credit card travel insurance, not all policies are created equally.
Pre-existing medical conditions
Credit card insurance policies do not automatically include coverage for many pre-existing medical conditions. Some may be automatically covered, so check the PDS. But if you have medical conditions that are not covered, some insurers will allow you to declare additional pre-existing medical conditions for a $75 assessment fee. This fee is refunded if the insurer refuses to cover the declared pre-existing conditions.
If you’re travelling overseas regularly and are paying a $75 fee to declare pre-existing medical conditions each time, it may work out cheaper to purchase an annual multi-trip travel insurance policy. Purchasing a separate policy is likely to offer you better coverage to meet your own needs anyway, as it gives you the opportunity to personalise your policy and choose one that’s a best fit for you – rather than one your credit card provider picked off the shelf.
Ensure your travel insurance policy is activated
It’s also important to make sure that your policy has been activated before you depart on your trip. Some credit cards will only insure you if you purchased a certain amount of your trip (such as flights and hotels) using that credit card. Some also require you to activate the policy prior to each trip.
The last thing you want is to travel overseas without adequate coverage from some form of travel insurance – be it a credit card policy or a separate, paid insurance policy. Ultimately, if you’ve read the PDS, have activated your policy and are happy with the coverage, there is nothing inherently wrong with credit card insurance. But, as we’ve seen time and time again, travelling overseas without being properly insured can have disastrous consequences.
Join the discussion on the Australian Frequent Flyer forum: Should I get a paid Travel insurance policy?