It is summertime and most of your clients must be packing bags for an exotic holiday in India or abroad. Travel insurance is mandatory if your client is planning to visit US, UK and Schengen (most of Europe). This provides a huge opportunity to serve such clients by adding travel insurance to your offerings.
However, even if travel insurance is not mandatory in many countries, you should recommend this to your clients for both international and domestic.
Just as your clients will not buy a car without car insurance or a home without home insurance, they should not go on a trip without travel insurance.
Considering the increasing air, train and road traffic in India, it is a great opportunity for IFAs to recommend travel insurance to their clients by making them aware of benefits of such policies. A travel insurance policy can help them minimise financial risks and avoid mental stress in a pardeshi land.
Most general and health insurance companies in India offer overseas and domestic travel insurance. A comprehensive travel insurance policy offers many benefits such as medical expenses and loss or baggage. However, one can also opt for a specific policy that fits the purpose and duration of the trip (30 days or 45 days) and travel status (single or multiple trips).
What does it cover?
A travel policy covers medical expenses incurred during travelling. In addition, few companies provide cover for several other features like emergency medical evacuation to India, repatriation of remains and funeral expenses, accidental death or disability benefit, losses due to flight delays or loss of documents or baggage loss and so on.
What it does not cover?
Travel insurance does not cover pre-existing illness like diabetes, cardiovascular problems and so on. Also, losses that incur due to breaking foreign laws or making frauds are exclusions. In addition, losses caused due to wars and terrorism and commitment of suicide are not included.
How much premium is charged?
Sum insured under travel insurance ranges between $50,000 and $5 lakh depending on the size of the cover and risks involved. Some insurers also provide cover for adventurous sports activities. However, these are subject to the limits set by the insurer.
Most of the insurers charge between Rs.1000 and Rs.2000 for a single trip and Rs.3000-Rs.5000 for annual multi trip.
Almost all general insurers provide travel insurance cover. Non-life companies like ICICI Lombard, Bajaj Allianz and Tata AIG collect healthy premium through travel insurance segment.
Buy an annual insurance cover instead of buying it in a piece meal manner
An annual travel policy will be cheaper than a single trip policy if you take more than two holidays a year. A single-trip policy is ideal for a one-time vacation or business tour, while a multi-trip plan of one-year duration is perfect for frequent travellers.
The maximum number of days covered in a single-trip policy can vary from 15 to 45 days depending on the insurer.
Travel insurance is mandatory for trips to the UK, the US, France, Austria, Spain, Greece, Portugal and Germany (Schengen).
If the client is a frequent traveller, advisors should recommend a comprehensive annual travel policy to them. Else, you can also recommend travel insurance for a day or anywhere up to six months.
Also, sometimes your clients tend to forget to buy a travel insurance policy before leaving the country. Even if it is too late, you can recommend them to buy travel insurance abroad. There are many global insurance companies which can still provide the required coverage to you. You can be traveling anywhere in the world and still buy a policy online.
IRDAI has mandated insurance companies to pay 15% of total premium as commission to insurance agents. Similarly, insurance intermediaries like insurance marketing firms, insurance brokers and web aggregators can receive up to 16.5% of total premium as commission.
Travel insurance has proved to be profitable for most general insurers. In FY 2015-16, the insurance sector has issued 22.39 lakh overseas travel insurance policies covering 39.29 lakh persons. The gross premium income from overseas travel insurance business for FY 2015-16 was Rs. 536 crore as against Rs. 465 crore in the previous year.
In addition, incurred claims ratio (ICR) for travel insurance was around 53% percent in FY 2015-16. Typically, a ratio of less than 100 indicates that insurers are making money from a segment.