Insurance is essential luggage

AUSTRALIANS are renowned travellers – last year alone we collectively made 6.8 million trips overseas.

That figure is likely to increase this year as the strength of the Aussie dollar makes it even more compelling to holiday internationally.

If you are heading overseas, travel insurance is one piece of luggage you can’t afford to overlook.

Browsing through the Smart Traveller website of the Department of Foreign Affairs (DFAT), you could be forgiven for thinking the world is a pretty dangerous place right now.

DFAT warn of flight disruptions due to volcanic activity in Indonesia, radiation issues in Japan, and caution against travelling in Syria.

Thankfully, most of us will have an uneventful trip overseas.

But even if you are travelling to a seemingly safe destination things can go seriously wrong.

Around 25,000 Australians get into trouble overseas each year.

The problems range from relatively minor issues like theft through to serious medical problems.

Indeed, each year around 1200 Australians require hospital treatment overseas.

Falling ill in another country can be a traveller’s worst nightmare. Along with language barriers and in some cases, dodgy hospital facilities, you could be left with a painful medical bill.

DAFT say hospital costs in parts of Asia can amount to more than $800 per day. A medical evacuation from Bali to Australia can cost up to $60,000.

Without travel insurance, many ordinary Australians would struggle to meet these sorts of bills.

DFAT warns that some families have been forced to sell their home to bring relatives back to Australia for medical treatment.

The majority of holidaymakers do take out travel insurance, but it’s worth being careful about the cover you buy as premiums and policies vary widely.

A family taking a two-week trip to the USA in June for example, could pay premiums ranging from around $265 to more than $400.

It can be tempting to avoid the cost altogether by relying on the complementary travel insurance offered by many credit cards.

The problem here is that the card issuer may impose strict eligibility requirements, and you need to be quite sure that you’re covered before leaving home.

The only way to know is by getting hold of a copy of the policy from your bank or credit card provider and reading it carefully to understand how the policy works.

Irrespective of how you organise cover, be sure to check your policy’s exclusions. Some of the cheaper travel policies won’t cover you for medical costs if you have a pre-existing health condition.

Unattended baggage is a common exclusion across most policies, so keep an eye on your belongings whenever you’re in a public place.

It’s worth pointing out too that you’re unlikely to be covered for accidents or injuries that happen if you had a few drinks too many.

For more details on how to choose travel insurance, take a look at And heed any travel warnings issued by DFAT.

Paul Clitheroe is a founding director of financial planning firm ipac, Australian Government Financial Literacy Board chairman and chief commentator for Money Magazine.

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