Understanding Travel Insurance - 04 Glossary of Insurance Terms

Travel Assistance: Travel Assistance services may be bundled into an international medical insurance or trip protection plan, but these services are not considered insurance. The term travel assistance covers a broad range of services, often including but not limited to: toll-free multi-lingual 24-hour emergency telephone numbers, local offices around the world, web sites offering aid and advice to travelers in need of travel, medical or legal help, translation services, passport and visa assistance, assistance filling prescriptions, and virtually any special assistance useful to travelers in crisis who are far from home.

Some credit cards and international student identification cards and associations offer complimentary travel assistance benefits to their cardholders and members. However, keep in mind that although travel assistance services can provide instant help with a free phone call when needed most, not all services are free of charge once rendered. Many travel assistance services, such as legal counsel or translation services, are provided without question at the time of need, but with the clear understanding that the traveler will subsequently reimburse that service provider at a later date when the traveler is in a more convenient position to pay for the service(s) rendered.

Maximum Policy Coverage: This is the maximum amount of money that the insurance provider will pay for covered expenses. This may be an overall maximum or an amount for each accident or illness.

Deductible: (Also known as excess in UK, NZ, AU) This is the amount that the insured must pay before the insurance provider starts paying. This may be an annual amount, an amount for the duration of the policy, or an amount for each incident.

Co-Insurance or Co-pay: This is the percentage or amount of expenses that the insured pays (if any) after the deductible is paid. Example: "Co-Insurance = 20% or co-pay is 80/20" means that the insurance company pays 80% of the charges, the insured pays 20%. Often there is a maximum co-pay amount, i.e., a limit or ceiling above which the insurance provider pays 100%. Example: "Deductible = $250 and 80/20 co-pay up to $5000, then 100% up to policy maximum." This means the insured is required to pay the deductible of $250 plus 20% of expenses up to $5,000, and the insurance provider pays 100% of covered expenses that exceed $5000 up to the maximum policy coverage limit. Thus, if total expenses exceed $5000 (e.g. $20,000 in total medical expenses) then the insured pays $250 (deductible) plus the co-pay maximum of $1000 (20% of the first $5000) for a total out-of-pocket cost to the insured of $1250, and the insurer pays the remaining $18,750 of expenses. Where total expenses are only $3000, then the insured pays $250 (deductible) plus $550 co-pay (20% of the remaining $2750) for a total out of pocket cost of $800, and the insurer pays the remaining $2200 of expenses.

Expenses: These are the expenses an insurance provider will consider for payment. These normally include expenses for surgery, hospitalization, doctors' services, x-rays, laboratory tests, prescription drugs and other treatments, as well as travel expenses such as necessities in the event of travel delay, baggage delay or loss, and non-refundable travel pre-paid travel costs in the cases of trip interruption and/or cancellation. Some of these expenses may be limited by the insurance contract. See exclusions.

Exclusions: These are the expenses that the insurance company or travel protection provider will not pay. Examples include: expenses resulting from illegal drug use, pregnancy, conditions which existed prior to the purchase of the insurance (see pre-existing conditions), participation in various dangerous activities, participation in certain types of sports (see hazardous sports and activities coverage), expenses resulting from acts of war, riot, insurrection, etc. Most insurance contracts have many of these exclusions. It is important to read brochures carefully.

Premiums: This is the amount that you pay to purchase international medical insurance, AD&D insurance, or travel protection plans. Premiums may be paid in advance, on a per trip basis, annually, monthly, quarterly, or by semester, depending on the policy. Premiums for travel protection plans are usually paid in advance, either annually or on a per trip basis.

Emergency Reunion and Repatriation Benefits: Emergency reunion (also known as "visitor to bedside" ) means covering the expenses for having a family member transported to the injured or ill insured during a medical emergency. Lodging expenses are generally covered. The repatriation benefit pays the cost of preparing the body of a person who dies in a foreign country and returning the body to the deceased's home country. These benefits are often bundled together and included in international medical insurance and travel protection plans.

Insured: This is the person covered under an insurance policy, i.e., the person for whom the policy was purchased.

Pre-existing Conditions: Medical conditions associated with the insured (or a spouse, travel companion, or close relative in the case of travel protection plans where trip cancellation results from the medical condition of someone other than the insured ) that existed before the plan or policy took effect are pre-existing conditions.

Many plans and policies offer limited or no coverage for medical expenses or trip cancellation expenses resulting from pre-existing medical conditions. These are known as pre-existing conditions exclusions. Most plans specify a period of time prior to the effective date of the policy (known as the "look-back period") during which any manifestation of a pre-existing conditions would constitute exclusions. Example: Pre-existing conditions exclusions are limited to "three years prior to the effective date of the policy." This means any expenses that are incurred after the policy effective date that are resulting from medical conditions that were manifested or treated within the last three years would not be covered. However, the look-back period for travel protection plans vary from 180 to as few as 60 days. Often when purchasing single-trip travel protection plans pre-existing conditions exclusions may be waived if the plan is purchased within a certain number of days after the initial trip deposit is paid (often 7-14 days).

Hazardous Sports & Activities Coverage: Coverage for medical expenses and/or trip cancellation resulting from engaging in certain hazardous, high risk sports and activities such as scuba and sky diving, rock climbing and bungee jumping (to name a few), is often explicitly excluded by international medical insurance and travel protection plans; however, some plans offer special hazardous sports and activities coverage that is optional and usually results in a only a modest increase in premium. Always make sure you are aware of the exclusions noted in the plan or policy you're considering, and if you plan to participate in any high-risk activities, look for plans with optional, supplementary hazardous sports and activity coverage.

Single-Trip: Single-trip plans cover one trip, usually up to a maximum of 180 days.

Annual Multi-Trip: Annual multi-trip plans cover all trips taken within a year (often with a maximum duration of 15-180 days per trip).

Individual Plans: Individual plans are designed and priced to cover one person.

Family Plans: Family plans are designed to cover all members in a family traveling together, and premiums are usually priced at a discount compared to the rate for a single person. Some family plans include relations beyond the immediate family, such as grandparents and in-laws.

Primary Coverage: Primary coverage plans provide coverage without regard to any other insurance or coverage the plan holder may have.

Secondary Coverage: Secondary coverage plans require plan holders to have primary coverage, and the secondary coverage only covers those expenses not already covered by the primary coverage plan.

Benefits: The amount payable by the insurance provider to a claimant, assignee or beneficiary under each policy.

Beneficiary: The person or persons designated by the insured to receive the proceeds of an insurance policy upon the death of the insured.

Common Carrier: Any conveyance for transporting passengers is a common carrier, such as a bus, train, airplane, ferry, limousine or taxi. A rental car or private vehicle is not a common carrier.

Daily Indemnity for Hospitalization: a fixed sum calculated per-day that the insured receives to replace lost income for each day spent as a hospital inpatient.

Underwriting: The underwriting process evaluates the likelihood an insured event will occur, determines its likely cost, and whether or not the company should assume a particular risk (accept an applicant and offer coverage).