Paul Clitheroe
Paul Clitheroe

Travel Insurance makes lots of sense

IF YOU'RE planning an overseas holiday this Christmas it's essential to have travel insurance in place.

Government figures show that around 20,000 Aussie travelers get into trouble overseas each year, and you can't assume that the unexpected won't happen to you.

The majority of holidaymakers, around 70% of us, take the sensible precaution of organising travel cover. Yes, it's an extra cost to factor into your vacation budget but with some shopping around you should be able to find a competitively priced policy that suits your needs.

The internet makes it easy to compare policies and premiums, and the savings can make the effort worthwhile. How much you pay for travel insurance will depend on the level of cover you want, the duration of your trip, your age, your destination, the size of the excess and the insurer involved. As a guide to the cost, I checked out what a family of four taking a 2-week trip to Fiji in early December could pay and found premiums ranging from $134 to 304. It is worth shopping around.

Some providers of travel insurance may not be household names in this area so it pays to cast your net wide. Australia Post for example offers travel cover, with the quoted premium for the Fiji family holiday described above being $137.

Whenever you take out any form of insurance it is critical to be honest with the provider, and this definitely applies to travel cover. In particular, let your insurer know about any pre-existing medical conditions that could flare up while you're away. And be upfront about any adrenaline-charged activities you may have planned. A week of surfing or scuba diving may seem like healthy outdoor fun to you but your insurance company could regard it as 'dangerous', and it's better to pay slightly more in premiums than have any claims rejected altogether.

If you plan to take along items of value like an expensive camera, jewellery or a laptop computer, check to see if these are covered by your policy. You may have to pay a bit extra to insure certain valuables up to an agreed limit.

Your credit card may offer free travel insurance as long as you pay for all or part of your trip with your card. It's a perk that can sound tempting though I recommend that you read the fine print very carefully. You could find the policy is narrow, possibly with lengthy exclusions and conditions, and you may be better off with an independently arranged policy.

Finally, check the 'Travel Advice' section of the government's Smart Traveller website (www.smarttraveller.gov.au). This is updated regularly with warnings about travelling to various danger spots, and your insurance may not apply if you visit a country against the advice of the Australian government. More importantly, you could face serious risks to your health and personal safety so it's worth heeding the warnings.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.



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