Why Extending Your Existing Travel Insurance Policy Might Not Be The Best Decision
Whether you’re travelling for a few weeks or a few months, there’s no denying the fact that travel insurance is a necessary evil. We’ve all heard horror stories of people being caught with bad travel insurance or even worse, none at all. For some of these people, being caught in an medical emergency ended up costing them their life savings.
A lot of people choose to take their chances. Maybe it’s the fact that as Canadians we take healthcare for granted. We don’t really give it the praise it deserves when compared to some places in the world and the majority of the time we don’t even think about it until we need it. The truth of the matter is that despite all the criticism, Canadians have some of the best healthcare in the world when compared to cost and treatment equality for all.
Getting back to insurance, one aspect that is sometimes forgotten in regards to purchasing travel insurance is that most policies take effect the moment your feet leave Canadian soil, not when you purchase the policy. The agreement you sign when purchasing your insurance is contingent that nothing in your health status changes from when you purchase your insurance until you leave the country.
That means if you bought your insurance months before your trip, suffered something major (or even minor) in the interim, then proceeded to travel without informing your travel insurance provider, your insurance might be null and void regardless of whether you’ve already paid for it. That’s a bit of a punch in itself, however this post isn’t about that.
The dangers of relying on an extension for health insurance
Now this scenario doesn’t apply to everyone, however it’s still good to know. Most travel insurance companies allow you to extend your current travel insurance plan if you’re travelling longer than your current insurance allows. Whether you’re topping up a multi-trip policy, extending the perks of an included credit card travel insurance policy or have decided to travel longer and need an extension on you’re existing single trip policy they’re all pretty similar.
When you extend your existing coverage, you’re essentially purchasing another policy.
In turn, most extension policies are similar to how travel insurance in general works. That you are only covered for pre-existing conditions if the insuring company knows about them ahead of time and it’s included in your policy. Seems a little convoluted that you’d know about an accident ahead of time but essentially when you extend your existing coverage what you’re usually doing is purchasing another policy.
Clear as pudding, right?
To make this clearer I’ll give you an example. A retired couple in good health leave Canada to spend the winter down south. They already have a yearly multi-trip travel insurance plan that will cover them for 30 days at a time outside of Canada. Since they want to spend three months down south they purchase a two month extension on top of their existing plan with the same company.
All is going great for the first few weeks then suddenly, two weeks into the trip, the wife slips and falls and breaks her wrist and arm in several locations. The break is so bad that they need to put a rod and a few screws into her arm so that it heals correctly.
In comes her insurance company. They do a great job and everything has been taken care of and all the bills paid in a timely manner. The couple are very thankful that they thought ahead and bought a policy.
The problem arises when the woman needs to get the rod removed. For it to heal properly, it needs to stay in her arm for three weeks. Since her multi-trip policy expires at the end of the month, the minor surgery she needs to remove the rod falls onto her extension policy. The problem is that as far as her new extended policy is concerned, the rod is now a pre-existing condition and the insurance company won’t pay to have it removed.
The woman now finds herself in a predicament. The insurance provider isn’t evil, it simply sees that extended policy as a new policy. Rather than a true extension of the original policy, the two policies are seen as separate entities in their eyes. This is normal since when a claim is made, all costs are handled via the policy in place when the accident happened.
The couple now had to decide what to do. They still had over two months left on their trip and wanted to remain in the south. The travel insurance company, for their part, gave them the only thing they could that would fall within the 30 days, a free flight home.
That left them with a difficult choice, they could either fly home, remove the rod and then pay for the flight back south to resume their trip or they could pay the cost of getting the rod removed themselves and continue their trip immediately. Either way it was going to cost them money.
If you’re not willing to come home sooner than intended in case of a medical emergency, it isn’t a bad idea to make sure your covered for the entire duration of your trip with one policy.
This couple learnt a valuable lesson that sometimes extending an existing policy, especially when travelling for extended periods, might not always be the best decision.
Of course, this always depends on your exact policy and might be fine in certain situations. However, if you’re not willing to come home sooner than intended in case of a medical emergency, it isn’t a bad idea to make sure your covered for the entire duration of your trip with one policy.
Of course, even that is often up to the policy makers discretion with some companies opting to airlift a sick patient home for local treatment rather than paying exorbitant fees out of country. That’s a topic for another time, though.
This post wasn’t meant to dissuade you from ever extending your existing insurance, merely to inform you of possible complications. To be honest, we usually carry a yearly multi-trip policy and oftentimes extend it for our extended travels. The reduced costs make it an attractive proposition and we’re fine with returning early if we need to for health reasons. You just need to weigh the pros and cons for yourself.
If you have any questions, contact your insurance provider for more information and don’t forget to read the fine print on any policy you’re currently considering.
Looking for a new policy? Start off with a free quote from Kanetix.ca. It’s a great place to begin your search as it allows you to compare travel insurance costs from several different Canadian companies at once. From there check out any of our reviews up top to find the one that’s perfect for you.
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Great advice! This is definitely something that’s important to be proactive about. Like you said, you don’t want to be stuck in an situation overseas and not be able to pay/get the help you need. Thanks for sharing.
In the example you describe, I would have thought that as the condition did not exist at the time the policy extension was paid for, then the removal of the screws would have to be paid for by the insurer. If not, then this in my mind is very dishonest on behalf of the insurer. Do you have a list of insurers, or a website that documents what, in your experience deny claims for reasons such as this?
Hi Malcolm, the simple truth is that nearly all policies take effect the moment you leave on your trip not when it was paid for. This applies to extensions as well as standard policies. It doesn’t matter when you purchased the policy.
When the policy takes effect, it is under the pretense that your medical condition hasn’t changed from when you originally purchased it. This holds true for every single policy that we’ve ever seen.
In the true example given in this post, the removal of the screws fell within the original policy’s jurisdiction. The company was more than willing to fly the insured home within the original policy’s timeframe however as the extension is considered a completely new policy in the company’s mind and the condition didn’t exist when she purchased the extension, it wasn’t covered under her new policy.
This was the very reason this post was written, so that people understood that the vast majority of policies only take effect the moment your travelling starts and never on the date of purchase. It is clearly worded in the policy fine print and if you have a medical condition that changes between when you purchased your insurance and when it takes effect, it is up to you to contact your insurance provider otherwise your policy could be voided.
As always, if you have any questions regarding any policy you buy, make sure you ask your policy provider.
Also, keep in mind that I’m not a travel insurance agent, so my advice is strictly from one traveller to another.
Hi TIR,
Thanks for the explanation re policy extensions. My understanding is that insurers can decline payment of a claim because of any omissions on the medical questionnaire. Taking the lady in your example, because she did not declare that she had a rod in her arm that required removal and subsequently suffered a heart attack, even though the two conditions are not related the insurers would be entitled to decline coverage because she omitted to declare the ‘rod’ on her medical questionnaire before her extended policy came into force?
Yes Malcolm, that’s correct. If she suffered a heart attack on the extension and never informed them about the rod in regards to the extension policy they could argue that the rod led to her heart attack or that since she omitted the rod information, that her extension policy is void. Not particularly fair however it’s all there in the fine print.
The important thing to note from this is that travel insurance policies only take effect the moment they begin and not when purchased and any changes in a person’s health between the day they purchased their insurance and the moment they leave should be communicated with the insurance provider before going on a trip to ensure the policy is still binding.
For the most part it isn’t a concern however extension policies are a little trickier and any last minute health concerns should always be verified with the travel insurance company if you want to ensure you’re actually covered while you’re away.
Hope this helps.
TIR,
You should look into BCAA’s medical travel package. They offer $10m liability with the usual limits on coverage that other insurers offer. The huge plus for me is that if I make an error on the medical form, they increase my deductible by $10k, but still will pay for the rest of the coverage. So if I were to suffer a heart attack, with a potential of $150k in costs,I could recover in bed knowing that my liability would be $10k plus my $300 deductible maximum, rather than worry that my entire claim be denied and I would have to sell the house to pay for medical expenses.
My premium is also much less. My 6 month coverage ranged from $1300 to $1600 with RBC and others. With BCAA it is $870.
Malcolm.
Hi Malcolm, we’ve already reviewed BCAA’s medical travel package here. Thanks for highlighting the max deductible in case of error though.
I just reread the BCAA policy (August 2014) because of this and it actually states $5000 deductible (plus original deductible) however it renders the policy void from then on out unless you answer truthfully to the medical questionnaire and pay the difference in the premium. I would imagine that if you have a pre-existing condition that you left out that made you ineligible for coverage in the first place (something I can see a few people doing) that you would be declined further coverage completely.
If that was the case I would hate to get into an accident on the way back home. It would also mean you had zero coverage from then on out if you decided to continue your travels. There is a difference between making an error and complete fraud though so I wouldn’t count on this visible loophole for all my coverage needs.
Regardless of that, it is nice to know that there are some policies that factor in the chance of possible discrepancies when filling out insurance forms.
Thanks for informing us. For some, that policy can give them good piece of mind.
I am very frustrated with the lopsided, slippery slope medical questionnaires on the applications. My (younger than me} wife’s single YES answer was for prescribed nitroglycerin which was very short term. Short term because it was prescribed as a precaution until further evaluation determined the cause of the symptoms was indigestion. However, in the “severe review” travel insurance industry, the question as to whether she had ever been prescribed nitro had to be YES, resulting in her premium being double mine. Catch 22.
Jon, I can understand your frustration. I had a similar issue a few years back and my insurance costs more than doubled for my next few trips and it’s still costing me more now even though I’m in great health.
What you can try doing is to contact your insurance agent directly (not through a broker but directly with the company) and explain the situation. If you’re lucky, they’ll review the case and give you a better quote. Good luck!
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