Why buy travel insurance?

It's the last thing most of us want to think of before we set out on that eagerly anticipated trip. But it's an unfortunate fact of travelling life that reality sometimes doesn't follow the posted itinerary. People have accidents. Or they get seriously ill and end up in a hospital far from home. In that case, some of the best medicine may be that travel health insurance policy you were wise enough to buy before you left.

Why buy it?

Government health insurance plans may cover just a fraction of medical costs outside your home province or territory. A U.S. hospital stay can easily cost $3,000 US a day and the most generous government health plan will pay just $400 a day. Given those costs, it's a good idea to buy travel medical insurance even if you're just crossing the border for a same-day shopping trip. For people who head to the U.S. frequently, many companies offer annual trip plans that cover multiple visits.

Most Canadians don't bother with this insurance if they're staying in the country. But they may want to reconsider that. Many provinces do not cover such expensive services as air ambulance flights for out-of-province Canadians. These flights can cost thousands of dollars. An Ontario woman found that out in 2006 when she had to pay $7,356 for a 100-kilometre flight to a hospital in Victoria after being injured on Vancouver Island. A B.C. resident would have paid $274 for the same flight.

What does this insurance cover?

Plans typically cover accidents and unforeseen illnesses or diseases. Covered services include emergency medical care at a doctor's office or hospital, prescribed drugs, diagnostic services, emergency dental services and air ambulance flights.

What isn't covered?

Many travel medical policies do not cover pre-existing conditions. The definition varies from policy to policy. There are policies that will cover people if their medical condition is under control and stable for the three or four months before travel. Be aware that a simple change in medication can mean that one's condition is not considered "stable." Policy definitions are critical and the rules vary depending on the age of the policy-holder. It's up to each policy-holder to make sure they qualify.

Most policies do not cover accidents or illness caused by "abuse" of drugs or alcohol. What constitutes "abuse" is open to interpretation. In April 2006, a Nova Scotia man who fell off a hotel balcony in Mexico found his insurance claim was denied because he had been drinking. His total bills for treatment and a flight home: $50,000.

Many plans will not cover complications during the last two or three months of pregnancy.

Also not covered are routine health-care, elective or cosmetic surgery, and followup, non-emergency care that could be done in your home province.

Many plans limit benefits if policy-holders fail to get advance approval for treatment.

Some policies don't cover risky sports like bungee jumping, rock climbing, scuba diving or hang gliding.

Many policies do not cover travel to countries where government travel warnings have been issued. Injuries caused by war are also excluded.

Self-inflicted injuries are not covered, nor are injuries caused while a policy-holder is committing a criminal act.

Also, travel medical insurance will not cover the costs of your trip if you have to cancel it for medical reasons. For that, you will need trip cancellation insurance.

Questions to ask

What is the deductible (the amount you have to pay before the insurance kicks in)? Sometimes, there is no deductible. At other times, the deductible can be substantial. Choosing a high deductible can save big money for people (like snowbirds) buying medical insurance for lengthy trips.

Do coverage details change at a certain age?

Is there a coverage limit?

Do I have to go to an approved medical service provider? Some plans limit or refuse payments if you use an unapproved provider.

Does the plan I've selected cover my pre-existing conditions?

Does the insurance company pay the hospital or physician directly? Or do you have to pay the full amount yourself and apply for reimbursement later?

What to do

Read all the fine print and ask questions before you buy. Carry proof of your insurance with you on your trip. And shop around – there's a big difference in policy features and costs. But don't pick a policy on price alone.

Before you buy, contact your employer to see if they provide extended health benefits that might cover emergency out-of-province medical treatments.

What not to do

Don't lie about pre-existing conditions. If you have a $50,000 claim after suffering a heart attack in Florida, the insurance company will likely check into your medical history.