When planning a trip on the cheap, travel insurance is usually the first expense to bite the dust, leaving budget-conscious travellers at risk. But what if you could have the dream trip and protect it too? Free inbuilt travel insurance on a credit card might be the answer.
Travel picture from Shutterstock
Inbuilt travel insurance on premium credit cards isn't a new thing (they've been offering it as a silver service extra to high-flyers since premium cards were invented) but did you know that some of the best inbuilt travel insurance policies come with a $0 annual fee price tag?
During a survey into inbuilt insurance on credit cards, researchers from financial comparison site mozo.com.au ploughed through the fine print of 27 cards from eight major card providers in the premium travel rewards card market to find out how they stack up, and whether your plastic really has you covered if something goes wrong when you're far from home.
During that study we came across something unheard of -- something truly for nothing from a credit card provider.
There are a total of four $0 annual fee credit cards offering inbuilt travel insurance at no cost and what's interesting to know is that some of them have travel insurance offerings equivalent or even superior to premium cards with hefty price tags.
Here's the kind of travel insurance you can get with zero"extra" spend, listing the amount you'll have to spend on holiday bookings to qualify:
|Card||Bankwest Zero Gold||Bankwest Zero Platinum||HSBC Premier World MasterCard||Westpac 55 day Platinum Visa|
|How much of holiday must be paid for on card?||Minimum $500||Minimum $500||90% of return overseas ticket||Minimum $500|
|Who's Covered?||Spouse and dependents up to 21||Spouse and dependents up to 21||Spouse and dependents up to 21||Spouse and dependents up to 25|
|Total Luggage||$10000 per person, $15000 total||$20000 per person, $30000 total||$25000 per person, $40000 total||$20000 per person, $30000 total|
|Electronics||portable electrical equipment $5500 - cameras $5500 - laptops $5500||portable electrical equipment $5500 - cameras $5500 - laptops $5500||portable electrical equipment $6000 - cameras $6000 - laptops $6000||portable electrical equipment $5000 - cameras $5500 - laptops $5500|
|Accomodation and travel||$475 per person, $1100 total||$475 per person, $1100 total||$500 per person, $900 total||$500 per person, $1100 total|
|Resumption of journey||$5750 per person, $15000 total||$5750 per person, $15000 total||$7500 per person, $14000 total||$5750 per person, $12500 total|
A quick glance at the table reveals the most comprehensive inbuilt insurance you can get (for literally nothing) comes for free on the Westpac 55 Day Platinum Visa, and all you have to do to activate your insurance is use the card to pay for $500 of your trip.
Of course there are inbuilt and standalone policies that are more comprehensive – but as something for nothing (and provided you never have an outstanding balance on the card so as to encounter that 19.59 per cent interest rate) you're looking at a pretty good deal.
Here are seven things to watch for when considering this kind of deal:
1. Annual fees aren't a reflection of value for money. The size of the annual fee you pay has zero relation to the comprehensiveness of the policy on offer.
2. Excess will be higher. When put side by side with a stand-alone policy, inbuilt insurances come with a higher excess usually about $100-$150 more expensive "per claim" than a standalone policy.
3. Dental coverage is limited. Inbuilt insurance policies come with limited caps on emergency dental. If you want more than $2000 in emergency dental from inbuilt insurance, choose an NAB card or a stand-alone policy. (The cheapest annual fee you can pay to score an NAB product with that policy attached is NAB's Velocity Rewards Card with $150 Annual fee).
4. Big ticket payouts don't exist. You won't find high-level travel insurance perks and cover for things like: emergency companions, hospital cash allowances, accidental death, permanent disability, loss of income, personal liability, pre-existing medical conditions and dangerous sports and activities on an inbuilt travel insurance policy.
5. You have to put some holiday spend on the card to activate the insurance. Make sure you tick the boxes to activate your travel insurance -- this usually involves spending a certain amount of your travels or return flights.
6. Don't leave valuables in your car. Personal property left unattended in a motor vehicle will get less cover.
7. Assume nothing, read your policy. Travel insurance policy fine print can drag on in Tolstoy-esque fashion but its well worth taking the time to read and check the exclusions.
If too many people take the offer of something for nothing we expect that the banks might close the loophole, but for now inbuilt insurance on a $0 annual fee card is the cheapest travel insurance in town.
Kerry Lotzof is a personal finance expert and global nomad, covering lifestyle and finance topics for Mozo.com.au, Australia's money saving zone