How Do Travel Insurance Discounts Work and Are They Worth It?
I see a number of travel insurance providers offering various discounts, but it can be difficult to figure out how they work and which ones actually offer the best savings. Can you please provide some guidance?
Many travel insurance providers offer pricing discounts – usually expressed as a percentage (i.e. Save 5% or 10%). Some of the more common discounts being offered include:
- Member Discounts - For individuals who are members of a certain group
- Loyalty Discounts - For repeat clients
- Claim Free Discounts - For repeat clients who have not made a claim over a certain number of years
- Spousal Discounts – For spouses who purchase their policies together
- Early Bird Savings - For purchasing your policy before a certain date when rate increases are anticipated to come into effect.
These types of discounts can sometimes result in better pricing from one provider vs. another provider when comparing prices - in fact, we at Snowbird Advisor Insurance offer a variety of discounts ourselves.
However, while these discounts may appear enticing at first glance, in many cases they don’t actually result in lower prices. Remember, when comparing travel insurance providers, don’t assume that just because one provider is offering a bigger discount their pricing will be better.
If “Provider X” is offering discounts that add up to 20% in savings, while “Provider Y” is only offering discounts that add up to 5% in savings (or no discount at all), you might assume at first glance that you would get a lower premium from Provider X.
However, what you may not know is that Provider X’s regular premiums may be significantly higher than Provider Y’s regular premiums.
For example, for your trip, Provider X’s regular premium might be $100 while Provider Y’s regular premium might only be $80.
When you factor in discounts, you would pay the following rates to each provider:
- $80 for a policy from Provider X ($100 regular premium – 20% discount), and
- $76 for a policy from Provider Y ($80 regular premium – 5% discount)
In this case, even though Provider X is offering what appears to be a much bigger discount, you would actually get a better price from Provider Y.
The bottom line:
All of this isn’t to say that you shouldn’t look for discounts, as discounts can save you money on your travel insurance premiums. However, discounts can sometimes be misleading and the only way you’ll know for sure if you’re getting a better price is to actually shop around and get quotes from multiple providers so you can compare premiums.
Disclaimer: The material provided in the Snowbird Advisor Insurance Learning Centre is for informational purposes only and does NOT constitute insurance, legal, financial or other advice, and should not be relied on as such. If you require such advice, you should speak with a qualified professional to assist you.