Why Your Credit Card’s Free Travel Insurance Is Not Enough
Key Takeaways:
- Credit card travel insurance may not provide sufficient financial protection, especially for medical emergencies, pre-existing conditions, or travel with family members. Always review the terms and limitations carefully.
- Standalone travel insurance plans provide broader, customisable coverage, including options for adventurous activities, family protection, and enhanced COVID-19 benefits.
- Credit card travel insurance often requires activation through specific conditions, such as paying for your trip in full using the card, which many travellers may overlook.
Is Free Credit Card Travel Insurance Enough for Your Next Trip?
These days, most people would not dream of travelling without insurance, and many credit cards now offer free travel insurance as part of their perks.
But is that coverage really enough? How well are you protected when things go wrong abroad? In an emergency, the last thing you want is to second-guess your insurance plan. That’s why it is worth considering a standalone travel insurance policy. It could make all the difference when it matters most.
Free Credit Card Travel Insurance Coverage
Many credit cards offer complimentary travel insurance with basic coverage, such as:
- Trip Cancellation or Interruption: Reimburses non-refundable costs if your trip is cancelled or cut short for a covered reason.
- Baggage Loss or Delay: Covers expenses for lost or delayed luggage.
- Travel Accident Insurance: Provides limited benefits in the event of accidental death or serious injury during your trip.
While these benefits may seem helpful, they often provide limited financial protection. Medical emergencies, serious accidents, trip disruptions, and theft are typically underinsured or not covered at all. In most cases, coverage only applies to the primary cardholder; family members are typically not included.
Credit Card Travel Insurance Activation Requirements
Credit card travel insurance is not automatically activated. You must meet certain conditions for the coverage to apply:
- Full Payment Requirement: You typically need to charge the entire trip cost to your credit card. If you pay only part of it or use an alternative payment method, the insurance may not be applicable.
- Advance Activation: Some credit card providers require you to take extra steps, such as registering for the insurance or notifying them before your trip. Without completing these steps, you may not be covered.
These requirements can easily be overlooked, and many travellers only realise they are unprotected when it is too late.
Credit Card Travel Insurance Coverage Limitations and Exclusions
While credit card travel insurance may be convenient, it often comes with significant gaps in protection:
- Pre-Existing Conditions: Most policies do not cover medical issues that existed before your trip, which means you could end up paying out of pocket for unexpected treatment.
- Coverage Caps: Payout limits are usually much lower than those of standalone plans and may not cover costly emergencies like hospital stays or cancelled flights.
- Excluded Activities: High-risk or adventure activities, such as skiing, bungee jumping, or scuba diving, are often not covered. Injuries resulting from these activities are typically excluded.
Knowing these limits is essential if you want reliable protection while travelling.
Travel Insurance vs Credit Card Travel Insurance Coverage: What’s the Difference?
While credit card travel insurance may offer some basic protection, it often falls short compared to a standalone travel insurance policy. Here’s a side-by-side comparison to help you understand the key differences:
| Category | Travel Insurance Plan | Credit Card Travel Insurance |
| Cost | Requires a one-time premium payment | Free, provided you pay for your trip using the eligible credit card |
| Accessibility | Widely available through insurers and online platforms | Only offered by selected credit card providers |
| Who Does It Cover | Can include family members under a single policy | Usually covers only the cardholder, sometimes the spouse |
| Type of Coverage | Offers comprehensive protection with flexibility to choose coverage according to your needs | Typically limited coverage with little flexibility |
| Add-ons | Allows optional add-ons (e.g., extreme sports, trip curtailment, higher medical cover) | Limited or no option for personalisation |
Cost
The biggest difference between credit card travel insurance and regular travel insurance is the cost. Credit card coverage is offered as a complimentary perk, while standalone travel insurance requires you to pay a premium.
At first glance, “free” insurance may seem appealing. However, the coverage is often basic and may not protect you in more serious or complex situations. By paying for a travel insurance plan, you gain access to more comprehensive coverage that may help reduce the financial impact of unexpected events during your trip.
Accessibility
Paid travel insurance is widely available through a range of providers, giving you plenty of options to choose from based on your needs and budget.
In contrast, complimentary travel insurance is only available to certain credit cardholders, and not all credit cards offer it. This makes access to free coverage more limited and dependent on your card’s benefits.
Coverage
One of the key limitations of credit card travel insurance is its coverage. Most plans only protect the primary cardholder, and sometimes the spouse. This means that other travelling family members, such as children or elderly parents, are usually not included and would need separate travel insurance.
Coverage is also tied to the charges made to the card. If you book your flights using the credit card but pay for your hotel with a different method, the insurance may only cover flight-related issues, not accommodation. To be fully protected, you would need to charge all travel expenses to the card.
While credit card travel insurance can be a convenient bonus, it often comes with strict conditions and limited financial protection. A regular travel insurance plan, such as Income Insurance’s travel insurance, provides comprehensive coverage, giving you peace of mind for your trip.
Income's Travel Insurance allows individuals to opt for family cover1; when travelling with a spouse or partner and children, ensuring everyone is protected throughout the trip.
Moreover, these plans include enhanced COVID-19 coverage, offering added peace of mind while travelling.
Income’s travel insurance also covers adventurous activities2; such as skiing, bungee jumping, and skydiving, ensuring you stay protected during high-adrenaline experiences.
You can choose between single-trip or annual plans for yourself and your family. This flexibility, combined with comprehensive coverage, helps with providing for a smoother, more worry-free travel experience.
Coverage Options and Flexibility
Credit card travel insurance is usually fixed, with little to no room for customisation. You cannot add features or adjust the coverage to match your specific needs. If important benefits are missing, relying solely on this free coverage may leave you underprotected.
In contrast, paid travel insurance plans offer greater flexibility, allowing you to choose from different coverage tiers and add optional benefits according to your specific travel plans. While more comprehensive plans may incur higher costs, they provide the freedom to choose your coverage according to what you need.
When choosing a travel insurance plan, it’s important to consider coverage for these following areas:
Trip Inconveniences
Flight cancellations, postponements, delays, and lost luggage are common issues that can disrupt your travel plans. It is essential to review your policy’s terms, as coverage for delays often depends on specific conditions.
For example, Income’s Travel Insurance covers travel delays of up to 120 hours3; for any reason4, including flight or train delays, bad weather, or emergency situations not caused by you.
Medical Expenses and Evacuation
Travelling often means being in close contact with others and trying unfamiliar foods, so it is not unusual to catch the flu or suffer from food poisoning abroad. These common issues are often not covered by complimentary travel insurance. In contrast, paid travel insurance typically includes coverage for overseas medical expenses and emergency medical evacuation.
Choosing a Travel Insurance Plan for Your Needs: Coverage Tiers and Options
A travel insurance plan that provides comprehensive coverage doesn't have to be expensive. Most insurers offer tiered options at different price points, allowing you to choose a plan that suits your budget and travel needs. All tiers generally cover a range of situations, from minor inconveniences to serious accidents or even death. The main differences lie in the cost of the plan and the maximum benefit for each plan.
Income Insurance offers three tiers: Classic, Deluxe, and Preferred. You can also choose to buy coverage as an individual, for a group, or as a family, with family plans offering better value for multiple travellers.
If you are travelling with someone who has a pre-existing condition such as diabetes, heart conditions, high blood pressure, asthma and eczema, consider a travel insurance plan that includes coverage for such conditions, such as Income’s Enhanced PreX Travel Insurance. It includes medical expenses and emergency medical evacuation coverage due to pre-existing medical conditions4, which are usually excluded from standard travel insurance policies.
For short trips, you can also consider Income’s FlexiTravel Plus, which provides travel insurance by the hour, a flexible option that allows you to adjust your trip coverage.
What Kind of Coverage Can Income’s Travel Insurance Plans Offer?
With Income’s Travel Insurance plans, you’ll get comprehensive coverage that gives you peace of mind while you travel.
Although credit card travel insurance is often regarded as “free”, it typically comes with limited protection. Choosing a standalone travel insurance plan allows you to be more certain that your coverage aligns with your needs, especially in unexpected situations abroad.
Final Considerations
To enjoy a smooth and stress-free trip, it is crucial to make sure your travel insurance sufficient. Here are a few steps to consider:
- Review Policy Terms: Take time to understand the terms of your credit card’s travel insurance. Check what is included, what is excluded, and any steps needed to activate the coverage.
- Consider Supplemental Insurance: A regular travel insurance plan can fill in the gaps, offering higher coverage limits and broader protection for medical emergencies, cancellations, or adventure activities.
- Consult Experts: Speak to an insurance advisor to assess your travel needs and find a plan that offers the right level of protection for your trip.
Your safety and peace of mind matter when travelling. Contact an Income advisor today to find a plan that suits your needs.
1 Family cover provides coverage for 1 or 2 adults who are spouses or partners at the time of purchase and any number of their children as long as:
- Adult(s) is 16 years and above and is the parent or legal guardian of the children
- Child(ren) is below 21 years old and is the biological or legally adopted child(ren) or ward of the adult named under the policy
- Adult(s) and child(ren) must be insured under the same policy
- Adult(s) and child(ren) must travel together if they are insured under single trip plans (not applicable for yearly plans).
2 This policy does not cover claims for loss or liability directly or indirectly caused by or arising from extreme sports which involve speed, height, danger, a high level of physical exertion, highly specialized gear or spectacular stunts, whether they are played competitively or non-competitively, in a team or individually. Adventurous activity means any recreational activity commonly available to the public that is done overseas during your trip for leisure or as part of the tour and which:
- is undertaken while complying with all safety procedures, such as wearing safety equipment and following rules and regulations; whether specifically advised or generally expected of a reasonable person,
- where guidance and supervision of licensed guides or instructors are available, the recreational activity must be carried out under the guidance and supervision of licensed guides or instructors of the tour operator or activity provider, and
- is not excluded under the general exclusions listed in part 4 of the general conditions of the policy.
3 For Preferred Plan. Policy Ts&Cs apply.
4 We do not cover claims arising from a pre-existing medical condition where you have been given a terminal prognosis with a life expectancy of under 12 months. Please refer to policy conditions for the precise definition of pre-existing medical conditions.
This article is meant purely for informational purposes and does not constitute an offer, recommendation, solicitation or advise to buy or sell any product(s). It should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. Please seek independent financial advice before making any decision.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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