Travel insurance: A guided tour

In addition, insurance regulators are zeroing in on potential issues with travel health insurance, including consumers’ lack of understanding of these products.

That’s why you should remind your clients of the importance of having coverage in place before they travel, and ensure they have the coverage that is right for them.

“We all hear these horror stories in the media, where people think they’re covered when they’re not,” says Scott McEachern, insurance agent with Barrie, Ont.-based McEachern Financial, which is affiliated with Qualified Financial Services Inc. of Toronto. “[A medical emergency abroad] can end up costing someone thousands and thousands of dollars. That’s just something that we don’t want clients to experience.”

Many advisors shy away from travel insurance because they hear stories of claims getting denied and they fear a similar incident could jeopardize their relationship with a client, says Robin Ingle, CEO of travel insurance provider Ingle International Inc. in Toronto.

“[Advisors] get nervous and they don’t want to affect the investment portfolio,” Ingle says. “So, they don’t necessarily want to recommend travel insurance to someone, in case [a claim doesn’t] get paid.”

Despite these concerns, however, more than 95% of travel insurance claims are paid, according to the Toronto-based Travel Health Insurance Association of Canada (THIA). Furthermore, Ingle says, advisors should consider the consequences should clients fail to get the necessary coverage.

“If someone doesn’t buy insurance and they travel, and they do have a serious problem, that bill can easily be US$500,000,” Ingle says. “So, [that problem] can affect their investments – it can affect their portfolio very quickly.”

Even if insurance per se falls outside of your primary service offering, encouraging clients to get travel insurance, or reviewing the coverage they have, can help them avoid a nasty surprise on their next vacation.

“For advisors to be thinking about all of the risks that their clients face is important,” says Will McAleer, president of Toronto-based World Travel Protection Canada Inc. and former vice president of the THIA.

– ADDRESSING MISCONCEPTIONS

Simply clearing up some misconceptions can go a long way toward helping your clients ensure they’re protected during their time away from home. One of the most common misconceptions among clients is that they are fully covered for health-care expenses when they travel, through their provincial health-care plan, their employee benefits plan or their credit card.

In reality, provincial health-care plans cover only a small portion of medical expenses incurred outside of Canada – typically 5%-15%, subject to certain limits, according to Ingle – and only for certain eligible costs.

Employee benefits plan and credit card coverage, meanwhile, vary. Although some provide comprehensive health-care coverage, others are much more limited.

“Get clients to read through the coverage to ensure they’re actually covered for what they think they’re covered for,” McEachern says.

Many clients who buy individual coverage fail to read the details of their policy.

“People just assume that everything is covered,” McEachern says, “when, in fact, there are some things that aren’t covered.”

For example, many clients don’t realize that medical expenses resulting from pre-existing health conditions may not be covered by their travel health insurance policy. Most policies have a “stability clause,” stipulating that pre-existing conditions are covered only if they are considered stable under the terms of the policy.

If clients have had symptoms or signs of illness, new diagnoses or new treatments within a specified period prior to their trip, McAleer says, most policies will not provide coverage for that condition.

Some policies also don’t provide coverage for policyholders who are intoxicated when an injury occurs.

Many clients are unaware of such clauses or exclusions, according to a paper on travel health insurance recently published by the Toronto-based Canadian Council of Insurance Regulators: “Often, consumers do not expect that [travel health insurance] products will contain such clauses or simply don’t fully understand the scope of such clauses, thus creating expectation and knowledge gaps.”

You can play an important role in helping your clients get the travel health insurance they need – and understand their coverage.

– CHOOSING THE RIGHT POLICY

Health should be a key consideration in helping your clients find the policy best suited to their needs.

“As an advisor,” McAleer says, “make sure that you’re aware of any medical conditions, so that you can look for a proper policy that will fit the need for that individual.” Some insurers, he adds, offer specialized policies that can provide more comprehensive coverage for clients who have special needs or pre-existing medical conditions.

Encourage your clients to disclose any health information that might be relevant when filling out their insurance application rather than trying to hide things.

“People are a little bit cavalier about what information they give, and they really need to be better at it,” says Ingle. “Make sure they fully disclose. Best they talk about it and don’t try to hide it.”

If you’re helping clients with the application process, McAleer recommends asking the questions exactly as they’re written on the application. If there is any confusion or uncertainty about the questions, don’t hesitate to call the insurer for clarification.

Considering where clients are travelling and the types of activities they have planned also is important. If your clients are travelling to a potentially dangerous location, for example, they may not be covered. And if clients are planning on participating in extreme activities, such as bungee- jumping or parasailing, those clients may require special coverage.

“Sometimes, we tend to be a bit more adventurous when we go away,” McAleer says. “And you want to make sure that based on what your client is planning, the travel policy is going to line up with that.”

Ensure clients purchase insurance that covers the entire duration of their trip. If there’s a possibility that they’ll extend their stay, choosing a policy that provides the option of extending coverage is a good idea. Clients who travel often might consider buying an annual plan that covers all of their travel for the year, a choice that can be more economical.

Most travel insurance plans provide coverage of at least $1 million, which typically is plenty, Ingle says.

– MAKING THE SALE

Adding travel insurance to your roster of products can be a good way to expand your offerings and create a new opportunity to interact with clients without an onerous administrative burden.

“I think [travel insurance] is a great offering for many advisors,” McAleer says, “because people like to talk about where they’re travelling, and travel insurance is such a great way to extend that client relationship. [Travel insurance] is not nearly as detailed as many of the other life insurance applications that [clients] would see.”

For advisors who are new to the insurance business, he adds, travel insurance can be an effective way of establishing relationships with prospective clients. The transaction is quick and easy, and advisors have the opportunity to follow up after the trip to find out whether the client needs any additional products or services.

“Some advisors will use travel insurance as a significant generator of new clientele into their practices,” McAleer says.

McEachern provides travel insurance to his clients alongside other types of insurance and financial services. Social media has made identifying clients who may need travel insurance easy, he says, because many consumers have gotten into the habit of sharing their travel plans on social media.

“Especially with millennials; they love to share when they book their vacations,” he says. When a client announces a planned trip, McEachern sends the client a message to find out whether he or she has travel coverage; if not, McEachern offers to help the client apply.

“Once we let [clients] know how inexpensive [travel insurance] is,” McEachern says, “they say, ‘Sign me up!'”

For advisors who want to expand their knowledge of travel insurance, the THIA is developing a travel insurance designation. The program, expected to launch in early 2017, will cover aspects of travel insurance, such as products, underwriting and claims. You will be able to get accredited by completing an online course and exam, with annual renewals.

If you are not interested in handling travel insurance sales yourself, you can develop a referral arrangement with an advisor or firm who specializes in this category. Ingle International, for example, offers advisors a referral fee for new clients.

“If we can offer travel insurance to a client of a financial advisor,” Ingle says, “then the client is not going to go down the street to a group that does both travel insurance and financial advice.”

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