Are Credit Card Travel Insurances Worth It?

Credit card issuers and companies never run out of perks or freebies to offer their clients. It’s been their long-standing marketing tool as well as customer retention initiative. On the other side of the fence, credit card holders welcome these offers with glee. An offer that seems valuable is the credit card travel insurance. But is it really worth it?

Credit card issuers and companies never run out of perks or freebies to offer their clients. It’s been their long-standing marketing tool as well as customer retention initiative. On the other side of the fence, credit card holders welcome these offers with glee. An offer that seems valuable is the credit card travel insurance. But is it really worth it?

Eligibility and activation

In order to qualify and be eligible for this ‘complimentary’ travel insurance offer, there are prerequisites the traveler need to fulfill. At the onset, the offer is not actually free. The higher annual fee paid on the credit card already gives away the catch. The cost of the travel insurance has been factored in.

Prior to the trip, the traveler must use the credit card to purchase the plane tickets and other related travel costs. And for the card companies to consider it as travel, the return tickets need to be purchased as well. The ‘swipes’ should also meet a minimum amount of spending, usually $500 or more depending on the amount set by the card issuer.

For group travels, the same rule and amount apply per individual. All spending must be before the departure and don’t forget to include the return tickets. The insurance coverage can be activated only upon full satisfaction of the above.


Why should credit card travel insurance be considered?

In truth, not all cardholders are granted the credit card travel insurance. The complimentary travel protection is reserved for high-end credit cards. But in terms of benefits, the offer has some stirring attributes.

  • Privileged cardholders use the plastic in most of their purchases. Rarely do they carry cash around. That’s the reason why they accumulate the most number of reward points. It works to their favor if the card with travel insurance coverage can earn for them points for the frequent flyers.
  • This complimentary travel protection is not location-specific compared to standalone travel insurance policies. The traveler can go anywhere with a few exceptions. There’s no need to secure separate coverage per destination. No added premium is charged for multiple trips.
  • A credit card with travel insurance that extends coverage to spouses, children or dependents is favorable. It simplifies the tedious process of securing travel insurance. However, some cards limit the coverage to just the principal cardholders. It’s best to check with the card company the scope of coverage prior to availing of the offer.
  • In terms of things or unforeseen events, credit card travel insurance covers fairly all the basics. Generally, the insurance covers the following:
    • Travel cancellations and delays through no fault of the cardholder
    • Loss or damage to personal belonging and delayed luggage
    • Overseas medical and hospital cover
    • Injuries for accidents sustained (in travel using a mode of transport)
    • Legal liability or third-party cover incase cardholder cause injury or damage to a person or property
    • Some may include accidental deaths, legal liabilities, hijacking and funeral expenses.

It’s negligence on the part of the cardholder not to review the details of the travel insurance coverage. Cardholders bear that responsibility. It would be foolish to assume coverage and protection for an emergency situation that actually isn’t.

ALL travel insurance policies, standalone or credit card, contain a Product Disclosure Statement (PDS). The terms and conditions are spelled out for the customer to review. Relying on the credit card protection without knowing the specifics can be a monumental blunder.

How worthy is the credit card travel insurance vs. standalone insurance

People forego of travel protection before because the insurance premium was treated more as an expense rather than a necessity. Things have changed that its importance has been magnified by the series of unfortunate events happening worldwide.

Today, travelers seek utmost protection during overseas travel be it business, holiday or adventure. The credit card travel insurance is certainly a fabulous product. Besides the convenience of securing a travel insurance policy, the cost is presumed to be cheaper, if not a perk for the valued client. However, the real question is if the protection is sufficient to make it truly worthy.

The standalone travel insurance


Many privileged travelers or the ‘metal’ cardholders rely solely on the travel insurance coverage but others who understand travel insurance will opt to go with the standalone insurance policy.

  • Unlike most credit card travel insurance policies, standalone travel insurance will cover pre-existing medical conditions such as asthma, diabetes, and others. Cardholders might be asked to pay a higher excess or secure additional cover.
  • In so far as medical cover limits, it’s better to have unlimited medical cover if you’re destination are major cities known to have high daily hospital bills. While a credit card travel insurance policy may include a medical coverage, the limit might not be suitable.
  • Both the credit card travel insurance and standalone insurance have coverage periods. For credit cards, the coverage is usually 90 days. The cardholder won’t be protected on the 91st day. If you’re taking longer trips, inquire about the multi/annual travel standalone insurance policy. The period of coverage for multiple trips can be a year or longer.
  • Credit card travel insurance will not go to the extremes. As mentioned, the protection is for the regular business trips or holiday vacations. Thus, if you’re going on an adventure, only the standalone travel insurance will cover travelers who will be engaging in “extreme sports.” Credit card travel insurance policies won’t cover bungee jumping, skydiving, and snow sports because of the higher risks.
  • There’s no difference between the credit card travel insurance and standalone insurance when it comes to claims. The procedures for both are the same provided the claimant knows the policy’s inclusions for claims to be valid.

Making the choice

Deciding on which travel insurance to pick and provide adequate protection is not complicated as it would seem. For as long as you know the risk exposure on a particular travel destination, check the exclusions in each.

Credit card travel insurance is sufficient for standard and shorter trips. It may be more cost-effective if you compare the premium on standalone coverage versus your card’s annual fee. On the other hand, the standalone travel insurance extends the coverage to include other travel purposes.

Obtaining travel insurance is for protection while you’re traveling overseas. The acid test will only come when a misfortune or accident happens. But if you’re still unsure if the credit card travel insurance is worth it, the answer is yes. But the standalone travel insurance is equally worth it. The important thing is to know the benefits, limitations, and restrictions on your travel insurance policy. That’s your real protection.

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Ryan Sharma, CIM

Ryan Sharma, CIM

Co-Founder & CEO/CIO

Ryan has over 15 years of experience in Information Technology, within the global financial services industry. His career has primarily focused on leading strategic initiatives within various retail and corporate business areas to innovate and future proof financial institutions for the long term.

This information is just our view and should be not be considered advice of any sorts.
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