In recent years, taking multiple overseas trips in a year has started becoming the norm, rather than the exception. Singaporeans take overseas trips for all sorts of reasons, family holidays, a friend’s wedding or even business meetings.
A common policy to purchase prior to an overseas trip would be travel insurance. When it comes to travel insurance, consumers can choose either for single trip coverage, or annual coverage. But which should you be choosing?
Single Trip Coverage
Single trip coverage is pretty straightforward. You purchase coverage each time you take a trip overseas. Cost of insurance would depend on where you are going, the duration and the extent of coverage that you seeking.
Typically, most insurance providers would allow customers to decide for themselves between basic and premium coverage. Generally speaking, the main differences between the two would be the extent of coverage, with the premium coverage costing more in return for greater coverage.
It is important to note that not all travel insurance policies are created equal, and that consumers shouldn’t be comparing products simply based on the cost.
Before purchasing a travel insurance policy, ensure that the coverage provided are what you need for the trip. For example, if you are doing winter sports and need to ensure coverage for rental of equipment, be sure that the policy you are looking at provides it.
Annual coverage is for travellers who travel overseas frequently. Rather than to purchase the single trip coverage each time they travel, consumers can pay for a one-time fee policy that provides coverage for all overseas travel within the year.
The clear advantage in this is that if you travel often enough, it would make financial sense to purchase an annual policy, instead of the single trip coverage. But how much do you need to travel before this makes sense?
Single Trip Vs Annual Coverage
Since the extent of coverage differs from policies to policies, we have decided to compare single trip policy against their more extensive counterparts with the same company, without adjusting for any differences in coverage.
For example, based on local general insurance provider EQ Insurance, an annual plan providing worldwide coverage would cost $380 per person. The same coverage purchased over a 10-day period would cost $77. In other words, if you make 5 of such trips in a year, opting for the annual coverage would be cheaper.
10-day single trip coverage to ASEAN countries would cost $48 per person. If the destination gets beyond ASEAN but within Asia, this would be $62.
What this also means is that there is no fixed formula for deriving the amount of days you need to spend overseas before an annual coverage becomes more worthwhile than purchasing separate single coverage. Price also depends on duration of trips; coverage for many short trips will be more expensive than a single long trip, even if the number of days spent overseas is the same.
Here is an example of the travel insurance policy offered by EQ Insurance:
Based on our observation, you would need to be spending between 40 to 60 days overseas before it becomes more worthwhile to be buying an annual travel policy.
So unless you are travelling frequently due to work related reasons, of which your company should then already have bought coverage for you, it is unlikely that most of us would be able to get so much time off our work that we can become such frequent travellers who are better off buying annual travel insurance coverage.
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