Everyone has heard the horror
stories: An evil travel Super VisaInsurance Canada denies the claim of another decent individual. Here is a
recent example: An 80 year old man went on a cruise and accumulated $107,000 in
medical bills after he fell sick with Super
Visa Insurance which led to
complications. The Super Visa Insurance
company denied his claim. (As you probably guessed, lawyers eventually got
involved). Several stories like this have many people believing that insurance
companies NEVER pay claims. So the question is: Is travel insurance just a big
scam? The short answer is no, but there are definitely things you need to know
to help avoid becoming another tragic story.
First off, travel insurance is
generally a good type of insurance to buy. "Good insurance" means
paying a reasonable upfront premium to transfer a large financial risk from
yourself to an insurance company. By contrast, extended warranty on your iPod
can be considered "bad insurance" because the premiums are expensive
and a broken iPod, although annoying, will probably not ruin you financially.
Since medical costs are extremely expensive (i.e. the average hospital stay in
Canada costs $7000 a day) travel insurance is a smart way to protect yourself
from the potentially crippling costs of a medical emergency.
Of course that all depends on the
insurance company actually paying a claim when the time comes. Claim payout
rates in the insurance industry are highly guarded, but there is some anecdotal
information available. In a recent article by the Chicago Tribune, the US
Travel Insurance Association indicated that approximately one in six
policyholders file a claim, and fewer than 10 percent of those claims are
denied.1 According to Canadian insurance broker Travel Insurance Office Inc,
approximately 9% of travellers have a claim, and less than 7% of those claims
are denied.2
So it looks like there is at least
some evidence of insurance companies paying out claims. But how can you make
sure an insurance company will pay YOUR claim, without getting expensive
lawyers involved?
One way to protect yourself is to
actually think like a lawyer when buying travel insurance. No, you don't need a
law degree from Harvard, but you do have to understand that an insurance policy
is a legal contract. If there is a claim, the insurance company is going to go
back that contract, which includes your insurance policy and any applications
or questionnaires you completed.
In the insurance world, claims are
very black or white, yes or no, covered or not covered. With that in mind, here
are some tips to help keep that dreaded "denied" stamp in the
insurance company's holster:
Read the policy: Contrary to popular belief, not everyone who works for an
insurance company is evil. When a claim is denied, some insurance insiders
sincerely wonder: "Didn't they read the policy?" Many claims are
denied because the policy specifically excludes the item in a section
appropriately called "Exclusions." Other denials are due to claims
that are simply not covered by the policy, or the amount claimed is less than
the policy's deductible. The lesson? Read and understand the policy before you
buy.
Answer the medical questions
truthfully and fully: Unfortunately, many medical
questionnaires are often long and confusing. To fill out the questionnaire
fully and accurately, you may need to consult your doctor, pharmacist, or a
relative who knows more about your medical history. Don't leave your travel
insurance to the last minute. The majority of claim denials are a result of
people rushing through the questionnaire, or not inquiring about items they
were unsure of. One insurance agent remembers asking his client, "Do you
have high blood pressure?" The client's answer, "No. The three
medications I take keep it normal." Remember, how you define terms is
irrelevant, it's the language in your insurance contract that counts.
Pre-existing conditions: Many plans cover pre-existing conditions that are stable
and controlled. However, you need to read how "stable and controlled"
is defined in your policy contract. For example, a condition will not be
considered "stable" if you changed your medication in any way
recently. Speak to the insurance company directly if you have questions.
Non-disclosure of medical information can void your coverage even if the
non-disclosed conditions or symptoms have nothing to do with the conditions causing
your claim. In the example above involving the man on the cruise, the insurance
company denied the claim because he failed to disclose a previous heart
condition in his application.
Advise the insurer of any medical
changes prior to leaving: If you've
already purchased your travel coverage and your health changes in any way
before the date the policy goes into effect, you must notify your insurer. A
health change in the interim might invalidate your coverage.
If you do get denied, fight it: There are no guarantees in life, and even the most
carefully completed policy application can result in a claim denial. Regardless
of the reason, don't accept the denial without a fight. The insurance company
owes you a clear explanation, and make sure to get it in writing. Specifically
ask for the a detailed explanation of why the claim was denied, which parts of
the contract were supposedly contravened, and how you can launch an appeal. If
all else fails, a lawyer may have to get involved to argue your case.
Travel super visa insurance is definitely worth
getting, and the evidence seems to show that insurance companies do pay out in
time of need. However, applying for travel insurance does take some effort.
Following these tips will at least lessen the chances of getting a dreaded
claim denial.
