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Coverage for snowbirds: Cracking the travel code

By Kate McCaffery | October 08 2015 03:00PM

In evaluating risks to your client’s carefully-laid financial plans, how often does travel come under consideration?

Does your client feel fiscally responsible for their globe-trotting grandchildren if an emergency were to arise? Are they planning regular southern-destination shopping trips for themselves, deep sea diving excursions, or other bucket list activities?

Even riding a jet ski as an afterthought can result in uncovered catastrophic costs – the risk of which can be mitigated, of course, but not without some effort and education, and not by relying blindly on pedestrian policies or standard coverage. 

In short, consumer financial literacy is low. It’s quite possible too, that travel insurance is one of the most misunderstood products around – occasionally misunderstood with some intention by those applying – even if it is a relatively straightforward product. 

The Canadian dollar is adding a new wrinkle, as well: Snowbirds are no-doubt considering alternatives to their usual U.S. destinations. Economically, they might be rewarded for thinking outside of the continent too, as insurers modify their travel programs to provide cheaper premiums to those destined for locations outside of the U.S. 

The biggest roadblock for an aging population seeking warmer climes of late, however – is the task of getting medical coverage appropriate for their destination, and for the activities they want to undertake while away. This probably requires some specialist attention too, particularly if your client has any reason for regular interaction with their doctors.

In reality though, who doesn’t have reason for regular doctor’s visits after a certain age? Sometimes willful, but often inadvertent, there remains a general misunderstanding on the part of consumers about pre-existing conditions, and the indicators that might place them into rated categories as far as insurers are concerned – effectively nullifying their coverage for all emergencies. 

While most in the industry understand that lying on an application is grounds for terminating a contract or denying claims, it’s not unheard of for some consumers to misstate the facts when applying for travel insurance, knowing fully that truthfulness will likely result in higher premiums. 

On the flipside, and perhaps more realistically, most of those at risk of having their claims denied, may have no idea.

The “doctor disconnect”

“They’ll say, ‘It was only a small stroke; the doctor says I’m fine... I’m not even on any pills right now,” says John Wilson, a travel insurance specialist with Butler Insurance in Niagara Falls, Ont.

Other clients, he says, can truly believe they have no pre-existing conditions, because those conditions are well under control, thanks to their long use of prescribed medications. 

What a lot of snowbirds don’t know, too, is that insurance companies will assume they have a condition, even if they’ve only been sent for diagnostic testing – a clause that will only be spelled out in the fine print or definitions. 

Wilson is also in a position to notice changes occurring in medical protocol over the years. 

In addition to the problem of investigative testing being “proof” of a positive condition as far as insurers are concerned, he says new tests are sometimes applied routinely, without patients being entirely aware. Those over 65 who suffer a fall, for example, may be tested to see if they’ve had a stroke, simply as a matter of routine. 

Even cases where clients are informed about stability periods, and decide to hold off on unnecessary medication changes prior to departure, denied claims can still result if notes in a doctor’s file reveal that such discussions have occurred, or that a suggested change in medication was denied by the patient.  

Other examples of the doctor disconnect in action include:

Colonoscopy test results which indicate no need for medication or surgeries; a client might believe they could answer ‘no’ to questions about having cancer, stomach or bowel issues. This, in turn, can result in denied claims because the investigative testing was undertaken in the first place. 

Water pill usage, high blood pressure medications, even preventative medications, will require clients to answer in the affirmative about pre-existing conditions related to those medications.

“Even if a doctor has said ‘nothing to worry about,’ we need to discuss it,” Wilson says. “Insurance carriers seem to view any suspicion of, slight concern for, or any ‘look-see’ test (to be a positive indication the client has a pre-existing condition).”

“Even if a doctor has said ‘nothing to worry about,’ we need to discuss it,” Wilson says. “Insurance carriers seem to view any suspicion of, slight concern for, or any ‘look-see’ test (to be a positive indication the client has a pre-existing condition).”

Of those high-profile cases which have regulators reviewing travel insurance sales today, Robin Ingle, president of Ingle International, says 99 per cent of the time, consumers failed to answer carrier medical questionnaires properly. THIA, the Travel Health Insurance Association, meanwhile, says 14% of those responding to a 2014 survey agreed they knowingly answered medical questionnaires inaccurately. Of those, half did so deliberately to get a lower premium.

How to choose coverage

THIA recommends consumers follow three “golden rules” when choosing appropriate coverage: Clients should first know their health, know their policies once they’re purchased, and know the details of their trip, to ensure coverage is appropriate. 

Organizations selling the product should be examined, as well, to ensure they actually have experience in handling claims which might occur. 

“They might know Florida really well, but can the travel assistance companies help you in all circumstances?” Ingle asks. “If you go on this great cruise to the Antarctic, are they the ones to be able to help you get out of the Antarctic?”

Brokers who provide service, and understand the tricks in hospital billing which can occur after the fact, can also be invaluable in the aftermath of an emergency stay. 

“You want to ride horses in West Palm Beach or climb Mount Everest? You want to go to the Syrian Turkish border? There is a product you can get, and it’s not expensive, compared to the risk.

“But as a consumer,” he adds, “you need to check things. You need to make sure you understand what you’re getting. If you have a special need, ask questions. There are companies out there who will find the right product.” 

In reinsurance, meanwhile, he says companies have discussed ways to create lifetime travel benefits where clients do not need to re-apply each year. “It was very tough, very hard for the underwriters and the reinsurers to think that through,” he says. “I think there’s a willingness to try and figure something out, but it may take a while.”

For bucket list travelers, meanwhile, he says clients often need to be reminded about safety concerns, and the practical elements needed if they find themselves in a real emergency. (How they might contact the insurance company at all, if they find themselves stranded on the side of a mountain, for example.) 

“Travelling on the whole is very safe,” he adds. “It’s safer than walking in your own city. But you could get sick. You could end up in a situation where you need to get out of that location. Understand where you’re going, and what the risks are. Buying the right kind of insurance is important.”

For those with a busy health history too, Wilson recommends clients have a look at their doctor’s files when applying . 

This is not a loophole

Two patterns people follow in purchasing insurance can also pose a problem, if not considered carefully before departure.

Those who purchase standard travel insurance, for an all-inclusive vacation for instance, may not realize that accident coverage for the use of rented jet skis, mopeds, or even the inflatable banana ride, is likely not included, by virtue of standard policy exclusions. 

“You’ve got your standard travel insurance products – they are meant for people on vacation, those going to traditional locations. They are not necessarily meant for you to be climbing a mountain, and they’re not meant for you to be doing treasure hunting in the Caribbean Ocean,” Ingle says. Similarly, an employee benefits policy may not cover sporting events or adventure travel. 

“You need to read your policies. They’ll say, for example, that they won’t cover mountaineering or backpacking, parasailing, or hang gliding. Or they won’t cover scuba diving unless you have a PADI (Professional Association of Diving Instructors) certificate. You’ve really got to look at these things and make sure you have the right product. “

With an annual plan or multi-trip plan, meanwhile, clients may need to call their provider, prior to every departure, or ensure they have proof of departure and proof of their return, for every visit, to prove they are eligible for coverage. 

Even with annual coverage, new conditions which occur in between trips will trigger pre-existing condition exclusions and limitations. 

In purchasing coverage over the phone, meanwhile, Ingle says some will think the product is better, because the provider doesn’t ask as many questions, or because the policy is issued immediately. 

“You don’t want to wait until after the problem occurs to find out whether you’re going to be covered or not,” he adds. “We have a regulated financial industry, but you do have to be careful about what you buy.” There are also companies, he says, who get into the business to meet a need, or to eke out economic benefits, “but it doesn’t mean they understand how to handle the servicing afterwards,” either.

Along with purchasing proper coverage, both Wilson and Ingle recommend clients also pay attention to the preparations they might need to make, in the event a claim is needed.

Make sure all medical questionnaire questions are answered correctly. 

Understand stability periods. Walk through the nuances of a contract with someone who has experience. 

Collect proof of departure and proof of return – by way of airline tickets, bank activity that shows your location, or even receipts for gas and groceries, purchased before you leave and when you return. 

Read and understand all policy wording, particularly anything highlighted or italicised, along with any detail about limitations, exclusions, and pre-existing condition clauses, before departure. 

If your client is doing something adventurous, what will they do in case of emergency? How will they contact help?

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