Travel Insurance

with Darryl Helliwell

Travel Insurance – Some unanswered questions.

The article on Aviva Travel, on pages 34 and 35 of In touch, Winter 2011 edition, gives a very comprehensive look into a travel insurance policy. The item on pre-existing medical conditions is especially good.

What is covered by a "standard" travel insurance can vary quite a bit from company-to-company. In order to lower the premium some companies remove sections of cover and, to get these, you have to buy a higher level policy, at a higher level premium. This can also apply to some banks’ policies, where you have to pay for the "missing" covers. The Aviva policy, however, seems to offer most of the standard covers, with some additional add-ons. One that looks particularly good is the closure of airspace extension, which would provide you with some cover if we have another ash cloud problem. Whether you consider this necessary or not is your choice but it should be borne in mind that under the current European Passenger Rights regulations airlines and tour operators are required to provide food and accommodation, especially for passengers stranded abroad. This would not apply if you were on say an American airline and stranded in the USA, as this would most likely fall outside these regulations.

The one thing the article does not explain is why Aviva has chosen not to cover people over the age of 79. This is, in fact, not an unusual decision and many insurers stop providing cover for people over 75, some stop at 75, some at 80 and others at 85. The reasons behind this can vary, but mainly it is the cost of both cancellation and medical claims. It is an unfortunate way of life that the older we get the more medical conditions we get. Many people start with a diagnosis of something like high blood pressure in their 50s and, by the time people reach 65, most people will have had either a blood pressure or high cholesterol diagnosis and, very likely, something else as well. On their own and controlled neither blood pressure nor high cholesterol is a great risk, it is the combination of these conditions with others that causes the greatest problems. If you add to these the recovery time the costs can be excessive. For example it will take someone who is 75 five times longer to recover than someone who is 55, and the recovery time increases the older you get.

For many years people over 65 have complained that their premiums have doubled when they reached the magical age and now most policies have treble premiums at 75. It is all down to the cost of claims, higher medical costs and a higher incidence rate of cancellation claims. Why 65 and 75? There is no magical answer to this other than simplicity. From a statistical point of view premiums should rise steadily from age 40 and there should be no sudden bumps but, historically, this was far too complicated to sell, especially for a low cost policy sold by travel agents. Most policies sold over the internet do not have these bumps, they have premiums rising gently from 40, probably in five year bands, with the curve rising as people get older. It is easier to do this on the internet, without published premiums, as each quote can be done individually, based on age, duration and destination. All premiums quoted nowadays are based on the person having no pre-existing medical conditions, these have to be separately declared and you will be charged an additional premium for the additional risk, in some cases it may also have an increased policy excess, especially on an annual multi-trip policy where the insurer would otherwise have to charge the additional premium based on the highest possible risk, which may be 2 months in the USA. Several of the internet based schemes give you the ability to medically screen yourself online, at the same time as you obtain a quotation. It can make it a long drawn out job, but it is all done in one hit. Before you start any medical screening, be it online or over the phone, make sure you have full details of your medication in front of you.

There are quite a few policies out there that do not have an age limit. Aviva quote "All Clear", which is mainly a high medical risk scheme. My company, Travel Insurance Facilities plc, has a special area on its Holidaysafe website called "Club 65", we also have a high medical risk scheme called "insurancewith". Age UK have a scheme underwritten by Ageas (formerly Fortis) and SAGA has a scheme, underwritten by First Assist, to name a few.

Darryl Helliwell, formerly Development Manager of Travellers’ Insurance Association Ltd., and now Chief Executive, Travel Insurance Facilities plc and UK and Ireland Branch Manager, Union Reiseversicherung AG.

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This article is published as provided by Darryl Helliwell, who is a member of Invicta. Its publication on this website does not imply or infer that the committee of Invicta, or the editors of this website, endorse any of the companies mentioned in the article. Nor are the committee, or the editors, in any way connected with Mr. Helliwell's business or his companies.