As you are about to board an overseas flight, you see a brochure for travel insurance and consider buying coverage just in case. Just as you’re about to purchase, you remember the life insurance policy you took out three years ago and think, “Surely this protects my family if the plane goes down. Why would I need travel insurance?”
A common error is in believing that travel and life insurance are essentially the same, but this is very far from the truth. Here are three major differences between the two to help you make an informed choice.
1. Duration of Coverage
If you’re one of many who have bought Australian life insurance through iSelect, it will cover you for the length of the policy, which is usually the life insurance industry standard of 10, 20 or 30 years. This gives your family and/or any other beneficiaries an assurance that the Australian dollars they’ll need will be there should the worst happen to you, at any time. In recent years there has been a big debate over the use of genetic test results and the issue of genetic discrimination when it comes to health and life insurance coverage, so the wise consumer will learn how genetic information and genetic tests are being used. iSelect can help you understand the ins and outs of the whole industry.
Travel insurance covers you for the duration of a particular trip, from the time of your departure until you return home. You can buy a one-trip policy or one that covers multiple trips. Either way, when any of those trips ends, the coverage does too. If your trip is canceled or has to be interrupted, some policies cover those situations too.
Travel insurance is designed to cover particular unforeseen incidents during your trip that can include severe illness or accidental death. Life insurance provides a monetary benefit to designated people when you die.
2. Extent of Coverage
No life insurance company policy is going to reimburse you if you lose a bag containing your laptop, but travel insurance will.
While some life insurance policies offer critical illness protection, this coverage can depend on what kind of health insurance you have if you fall and break an ankle on your trip. That is the kind of unforeseen medical expense usually covered by a travel insurance policy.
Maybe you thought you would give the local food a go and end up being rushed to a hospital to be treated for food poisoning. Your travel insurance usually has you covered. Your life insurance won’t help you here and for many travelers, neither will their US medical insurance.
If you have to be evacuated in order to receive additional medical treatment, because of severe weather, or due to political unrest or a terrorism threat, travel insurance will pay for the flight. In the latter situations, it’s wise to consult with your country’s embassy or consulate. If your flight is delayed until the next day, travel insurance can come in handy by covering the costs of the hotel room and any meals you might have.
After deciding to go ahead with the travel insurance, you fill out a form online and make a one-time payment with your credit or debit card. In contrast, paying for life insurance is usually done over time, usually either yearly or monthly. There are also options for three-month or six-month installments. Stop making the payments, and your coverage ends regardless of how much you have already paid for the insurance.
When you are considering buying life insurance, it’s good to have a long-term mindset and an interest in preparing for the worst.
It’s true that if you have both travel insurance and life insurance, your beneficiaries will be compensated by both should the worst happen. The key is to remember that it’s the travel insurance that it will offer financial protection for far more common scenarios such as lost luggage, canceled flight, extreme weather or illness or injury while traveling.