Credit Cards Are Poor Substitutes for Travel Insurance

Though you may have several credit cards in your wallet, don’t count on them for out-of-country travel insurance unless you specifically know their terms: Some no longer provide adequate coverage for medical emergencies.

Now, only premium cards—mostly those with high annual fees and exceptionally high credit limits—offer reliable medical benefits. Anything less than a minimum of $1 million of coverage, air ambulance repatriation to a hospital in your home community, and direct payment to foreign hospitals and doctors is not acceptable.

The bottom line is that you should no longer assume that your basic credit card will pay your medical expenses in case of illness or accident abroad. You need to know what your travel insurance covers and you cannot accept “emergency or medical assistance” as a substitute for the benefits listed above. Such services only help you find medical services abroad—they don’t pay the bills. Yet that is the extent of what most basic credit cards now cover.

Many credit cards, even some of the high-end ones, only cover younger or middle-aged groups (if you’re 55 or older, make sure you are covered). Many do not cover pre-existing conditions, even if they are stable and under control (e.g., high blood pressure). A good number will only cover you for a limited time (e.g., 40 or 50 days). If you are a snowbird or long term-traveller, that won’t do.

I hear from many travellers who think they can save money by “topping up” their existing days of coverage with an additional number of days through a conventional single-trip travel plan. That’s an option, but it can be tricky. And you need to be careful about the fine print. Not all plans allow for such top-ups, so each insurer has to know of the other’s presence. And there can be gaps. For example, if you come down with an illness on the 38th day of your 40-day plan, you not only run out of benefits on your first plan, but your illness becomes a pre-existing condition for your top-up plan—and that can disqualify your coverage. That happens more than you might think. (To avoid these issues, purchase a multi-trip annual plan and top up from the same insurer to ensure your coverage is continuous.)

My advice is that unless your credit card guarantees you the minimum coverage specified above and you see it in writing, leave your card for credit purchases and buy a stand-alone, dedicated supplemental policy from an agent specializing in travel insurance to cover you from day one of your trip. This way, you can avoid the pitfalls of coverage gaps and travel time limitations. It’s certainly safer. You’ll end up with more comprehensive coverage and you might also find that it hasn’t cost you much more.

Your purpose in buying out-of-country travel insurance is to protect you from unexpected, catastrophic costs. Just in the past couple of months, I have seen claims demanding over $200,000 for services rendered in foreign hospitals. You don’t need that—not for the sake of saving a few dollars in additional insurance premiums.

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