What is the Difference Between Travel Insurance and Credit Card Coverage?

Posted on: Jan 12, 2022 | | Written by:

What is the Difference Between Travel Insurance and Credit Card Coverage?

Published on January 12, 2022. EST READ TIME: 3 minutes

Difference between travel insurance and credit card coverage - Travel insurance

When planning a vacation, be sure you have enough financial security for the money you're investing as well as the money you'll need to spend in the event of a travel emergency. Many credit cards, particularly premium credit cards aimed at regular travellers, have a package of travel insurance policies that cover you if anything goes wrong during your trip. Is credit card coverage, however, as good as purchasing your own travel insurance policy?

Before you depend on a credit card travel insurance program, make sure you know when your card offers coverage, what is covered, and what the coverage limitations are. Similarly, if you get travel insurance, read it thoroughly so that you are not caught off guard later if a claim is refused. Here are the fundamental distinctions between travel insurance and credit card advantages.

Insurance for Trip Cancellation

If your trip is cancelled due to circumstances beyond your control, trip cancellation insurance reimburses you in full for any pre-paid, non-refundable travel charges. Sickness, accidents, extreme weather, military deployment, and jury duty are all common grounds for cancellation.

Credit cards - When you use your credit card to book travel on a common carrier such as an airline, cruise line, bus line, or train operator, your credit card normally provides trip cancellation insurance. Some credit cards demand that you pay for the full round-trip with the card in order to be eligible for trip cancellation insurance, while others cover one-way reservations. Credit card coverage levels are often restricted per trip, with further restrictions on the number of claims per year.

Travel insurance - No matter how you pay for the trip, travel insurance coverage will compensate you 100 percent for money lost in pre-paid and non-refundable deposits. You might still protect your total trip cost with a travel insurance policy if you placed your trip deposits on various credit cards, for example. This provides you additional options for paying for your travel deposits. Without the relatively modest maximums imposed by many credit cards, a travel insurance policy will enable you to completely cover pricey vacations. You may also add a feature to travel insurance that you won't find on a credit card: "cancel for any reason" coverage. This add-on allows you to cancel your trip for any reason not covered by the standard insurance, such as fear of flying or just changing your mind. Depending on the travel insurance provider, you may usually obtain a 50 percent or 75 percent refund for a "cancel for any reason" claim.

Reimbursement for Trip Delays

Credit cards - It may be used to compensate you for necessary expenditures such as an overnight hotel stay, food, and transportation. Most credit card trip delay coverage only covers you if there's a six- to 12-hour delay or an overnight delay, and benefits are usually restricted to one person per covered trip. To be eligible for coverage, certain credit cards additionally demand that you plan round-trip travel on a common carrier using your credit card.

Travel insurance - Travel insurance also needs a minimum delay period before you may utilize the coverage, however, there are plans available with shorter wait times.

Medical Insurance for Travelers

Credit cards - Typically, credit cards do not include travel medical insurance.

Travel insurance - Travel medical insurance is an important part of any complete travel insurance package. Travel medical insurance may cover ambulance services, doctor and hospital fees, and medicines if you get ill or injured while travelling. Travel insurance plans with high levels of medical coverage are available. If you're worried about catching COVID while travelling, make sure you purchase insurance that covers COVID-related medical costs.

Medical Evacuation in an Emergency

In the event of a serious medical emergency, emergency evacuation coverage often covers the required evacuation and transportation. This might involve life-saving medevac transportation and medical treatment.

Credit cards - Credit cards provide a broad range of services and coverage amounts. Preauthorization and agreement with your card's benefits coordinator are required for emergency evacuation services, which may not always cover repatriation back to your home country.

Travel insurance - Travel insurance policies with significant levels of medical evacuation coverage are available, with limits much beyond those offered by a credit card.

Services for Travel Assistance

Credit cards - Many credit cards provide some type of international help. These agencies may assist you by expediting credit card replacements, sending money to you in an emergency, dispatching roadside assistance, offering emergency translation services, or referring you to medical and legal resources. Many credit card travel help providers also offer passport replacement and connections to consular services. Although having access to assistance when travelling is beneficial, most of these services are not insurance; they give a recommendation but do not cover the cost of the services. Concierge services are available on certain credit cards and may be utilized at home or when travelling. A concierge can assist with dinner reservations, event tickets, and even local activity ideas.

Travel insurance - Similar to a credit card, your travel insurance coverage will provide access to a 24/7 worldwide support hotline. During your vacation, this support may aid you in finding a doctor or pharmacy, replacing damaged eyeglasses, currency exchange, and other services. Concierge services are included in some travel insurance policies.

Should You Purchase Travel Insurance or Use Credit Cards?

If you're looking for travel insurance, keep in mind that part of the coverage you want, may be available via credit cards. Even some no-annual-fee credit cards come with a travel reward package. If you can lower the cost of travel insurance, the annual fees of premium credit cards with coverage may be offset. Travel insurance, on the other hand, typically provides larger coverage limits than a credit card. Medical expenditures are also covered by travel insurance, which is essential for every overseas traveller.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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