Tan Kin Lian's Blog: Alternative to Travel Insurance

Tuesday, December 29, 2009

Alternative to Travel Insurance

I took two long trips in 2009, to Alaska and to Sichuan. Each trip was for more than a week. I decided not to take travel insurance, and to bear my own risk. My wife wanted to take travel insurance (as she is more risk averse) but finally decided against it.

I already have a large cover under a personal accident insurance. If there is an accident, it will be covered under this annual policy.

The travel policy covers loss of luggage, flight delay and other risks. But the amount of compensation is quite rather small, say $100 or so. It will be quite troublesome to make a claim for such a small sum. If I fall ill during the holiday, the medical expenses may cost a few hundred dollars. But the chance of making a claim is rather low.

I have taken more than a 100 trips during the past years and have never had the need to make a claim. I do not buy travel insurance for these trips. If the chance of a claim is 1 in 100, it is worth taking the risk. The premium saved on 100 trips would more than cover any future claim.

Tan Kin Lian

16 comments:

Anonymous said...: in the event of a medical evacuation, it may cost few hundred thousand dollars. not everyone has the ability to self insured. there was a case of a singaporean incurring that sum in a evacuation from the usa. without the insurance, he is dead.; December 29, 2009 8:47 AM
Anonymous said...: I wonder if I have been really a fool all along as I buy travel insurance even for a few days to Malaysia.
My heart feels better and safer after I bought the travel insurance, knowing should anything happens to me, there is some money to take care of it.; December 29, 2009 10:56 AM
Createwealth8888 said...: I thought we buy travel insurance mainly to cover:

Medical Evacuation Expenses and Repatriation Expenses

Am I wrong?; December 29, 2009 11:04 AM
Victor Foo said...: Hello Mr. Tan

I do agree with your suggestion.

However, I have to admit that I do purchase travel insurance whenever I travel - including business trip.

This is because I am very concern about emergency medical evacuation expenses.

I know such risk is relatively low but if it really happened (touch wood), the cost could be very costly instead.

Your thought ? Thanks.

Victor Foo; December 29, 2009 2:28 PM
C H Yak said...: I think the key factors for decision would be the risks involved in the place one is going to visit and whether he has a personal accident insurance policy which covers foreign hospitalisation and medical evacuation in case of serious accident.

For Jiuzhaigou, it used to be a highly risky and treacherous route when there were no airport there. Being in Sichuan, it is also proned to earthquakes.

I had travelled to remote areas in Yunan, Dali and Lijiang before which are also proned to earthquakes, and without buying insurance cover. On hindsight I should have been covered more because my personal accident cover then was limited.

One other major factor would be whether you will be travelling by light transport (cars and small coaches) between cities and staying in the cities themselves. If transfer between cities is say by train, it is relatively safe. I agree with Mr Tan in such situation, travel insuarnce is not necessary.

One need to assess the risk of accidents. Loss of baggage is minor.; December 29, 2009 3:29 PM
Tan Kin Lian said...: I decided that there is no need to worry about evacuation. If any serious accident happens, treatment can be done in Canada or China. There is no need to spend a lot of money to be evacuated to Singapore.; December 29, 2009 11:01 PM
Anonymous said...: I think we should buy travel insurance as medical treatment can be very costly overseas. In 2002, I went to Canada and had a minor finger injury (tendon broke) and this cost me over S$900 for simple medical treatment. The doctor diagnosed as tendon broke and no futher treatment required after x-ray. Just like that cost me over S$900.; December 30, 2009 2:56 AM
Anonymous said...: mr.tan, what about countries like burma, laos and vietnam. i have been to some of their hospitals for a visit, it will shock you and you would want to be evacuated.; December 30, 2009 6:52 AM
Tan Kin Lian said...: Those who wish to insure against the risk of evacuation on your visits to Laos or Vietnam are free to do so.

Your chance of needing the evacuation is less than 1 in a million. You pay $50 (say) for the travel insurance and the claim is $100,000 (say). You get better odds by buying the big sweep.

I have travelled to Laos and Vietnam and other less developed countries. I did not strike "evacution". Maybe I will after visiting them 1 million times.; December 30, 2009 7:42 AM
A Singaporean said...: I wonder, whether Mr. Tan has considered the "costs" to family members and close friends if a person chooses to be hospitalized overseas?; December 30, 2009 1:12 PM
Kiasu&Kiasi said...: Live life positively.

Life and living is a passage. If the passage is shorten by death, injury, so be it. Fear of the inconvenience and the cost are unworthy pursuits.

If dying and being hospitalised is such a worry, stay home and do not venture out. Otherwise arrange for the largest travel insurance... bring your own army to protect you and your own chef, food, vehicle and airplane.; December 30, 2009 5:07 PM
Anonymous said...: May be insurance companies like to use "scare" tactics so that you will buy travel insurance from them no matter how costly it is so that emergency evacuation is included?

My car insurance company recently sent me a renewal notice, "reminding" me that my new car warranty will void as they tie up with the authorised car dealer which only "genuine" car parts will be used in the event of car accident.

Thought only illegal engine modification or failure to service and maintain the car periodically will void the new car warranty?

After reading the "kind reminder", I decided to give it a miss.

I end up buying PA insurance for my parents travelling to USA for 90 days becos their travel insurance premiums were extra ordinary higher than their PA.; December 30, 2009 5:07 PM
Garrett said...: Mr Tan,

You may be biased, as no offense you are rich and can afford whatever hiccups that happen during overseas trip. For the average person traveling to USA for tour and needs hospitalization during an emergency, that can be a hefty bill indeed.

Anyway, I believe there are those flexible 1-yr term travel insurance (a few hundred bucks last I bought) that is valid for 1 year and valid for any country. The catch is that you are only covered if you stay in a country for less than 90 days. It's good for frequent flyers.; December 30, 2009 6:56 PM
Anonymous said...: Just to share an experience of a friend. He travelled to USA for a holiday trip and broke his femur bone (hardest bone in the whole human body). He had to undergo emergency surgery to repair the damage and was "rewarded" with a one week stay in a L.A hospital. Guess how much the bill came up to? US$20,000. Imagine he did not purchase travel insurance....he would have to bear the full costs. Further, for his plane ride back to Singapore. The airline has to covert a special area for him as he has to be in a cast and that costs $$ too. In the end, he did not have to worry about paying a single cent but just concentrate on recovery. Since that day onwards, he has been advocating friends to purchase travel insurance no matter how short / near the destination is. For you will never know what might happen. You buy insurance to buy peace of mind.; December 31, 2009 9:10 AM
Tan Kin Lian said...: When you buy insurance, make sure that you pay a fair rate of premium relative to the risk and compensation. Do not pay an excessive premium.

An accident may occur during your travel. Calculate the chance of that happening and the amount of compensation that you can get. Make sure that you pay a fair rate of premium.

It is cheaper to cover the risk of medical expenses through an annual personal accident policy, rather than pay the high premium for a travel insurance policy.

If you have sufficient savings or are well off, you can afford to carry the risk on your own. This applies to me, but it should also apply to many other people who have sufficient savings.

If you wish to decide otherwise, it is all right. You choose the option that best suit you. But do not be misled by anonymous comments from insurance agents who may not give you the right advice, due to conflict of interest and commission on the sale of the product.; December 31, 2009 10:18 AM
Anonymous said...: Medical expense can occur overseas due to personal accident or illness. Personal accident plan does not cover illness, which means it is not sufficient cover for medical expenses during travelling, besides the lack of coverage for other risks like trip cancellation.; January 01, 2010 4:29 PM