So, you’ve done your homework by comparing multiple travel insurance options, found the lowest quote and are ready to buy. Easy, right?
Not so fast!
Not all travel insurance quotes are created equal, which can often be the result of the deductible limit used by each insurance provider for its standard quote.
Before you purchase your policy, one of the many things you’ll want to compare is quotes that include a deductible vs. quotes that don’t include a deductible.
And as for that lowest quote you found, be aware that if it includes a deductible, it may not be the great deal you initially thought it was, as those initial savings may come at a much higher cost down the road.
Here’s what you need to know about deductibles to make sure you’re comparing apples to apples prior to choosing a travel medical insurance policy.
What is a deductible?
Simply put, a deductible is the amount you will have to pay out-of-pocket if you make a claim under your travel insurance policy before your insurance provider will cover the balance of the claim.
For example, if your deductible limit is $500 and you incur eligible expenses of $5,000, you would have to pay for the first $500 in expenses out of your own pocket, and your travel insurance provider would pay the balance of $4,500.
For policies that have no deductible or a $0 deductible, your insurance provider would pay for all of your eligible expenses and you would not incur any out of pocket expenses.
Using the same example as above, if your policy has no deductible or a $0 deductible and you incur eligible expenses of $5,000, your travel insurance provider would cover the full amount of $5,000.
Common Deductible Limits
Most deductibles start at $300 or $500, with limits increasing at various intervals that can sometimes exceed $1,000.
It is common for travel insurance policies to list their deductible amounts in U.S. dollars, which means that you would have to pay even more money out of pocket if you make a claim when the Canadian dollar is weak. If your policy has a deductible, find out if it's expressed in Canadian dollars or U.S. dollars.
For example, if the deductible on your policy is $500 USD and the exchange rate is $1.30, then you would need to cover the first $650 CAD in medical expenses before your travel medical insurance would kick in and cover the balance.
How Do Deductibles Affect Your Insurance Costs?
When it comes to travel medical insurance, the higher your deductible limit is, the lower your premiums will be.
Most travel insurance providers allow you to choose your deductible amount from a pre-set number of options, starting at a zero deductible with limits increasing into the thousands of dollars.
Important Tip - Not all travel insurance quotes are created equal. Some standard quotes include a deductible, while others do not, depending on the insurance provider.
This discrepancy can be misleading, as it can make a policy with a deductible seem less expensive than a policy with no deductible, but it's really comparing apples to oranges.
For example, at Snowbird Advisor Insurance, all of our standard quotes are based on a $0 deductible limit, which means all of your eligible travel medical expenses will be paid out by your insurance provider and you won’t incur any out of pocket expenses.
However, some insurance providers include a deductible when providing their standard quotes, for example, $300 or $500.
To get a true and accurate comparison, you’ll want to do two things:
- Ask for quotes from both providers using the same deductible limit
- Ask for quotes from both providers with no deductible or zero deductible limit
Once you put the two policies on equal footing, you’ll often find the “low quote” you initially thought was a great deal is actually similarly priced to other policies, and may even be more expensive than your other options.
Should You Choose a Deductible or Not?
That’s a tough question. Ultimately the choice will be a personal preference that usually comes down to a combination of your risk tolerance and financial resources.
What Is Our Deductible Policy?
At Snowbird Advisor Insurance, we believe in offering a choice so our clients can choose the best option that meets their needs.
Option #1 - Standard $0 Deductible
All of our standard quotes are based on a $0 deductible, which means that your eligible travel medical expenses will be covered from the first dollar and you won’t have to cover those expenses out of pocket.
Option #2 – Increase Your Deductible
However, we also appreciate that some travellers prefer to pay a lower premium up front and take the risk that they may need to incur some out of pocket expenses if they make a claim.
For travellers who fall into this category, we provide you with the ability to choose from a number of deductible options. If you would like a quote that includes a deductible, simply speak to one of our agents to assist you.
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.