Travel insurance

A domestic health policy or a life insurance plan does not help you when a flight is cancelled in a foreign country, or your bag goes missing at an airport you have never been to before. That is the specific gap travel insurance fills.

The workbook describes it as insurance for covering against travel risks — lost or stolen luggage, cancellation cover if you cannot travel because of unexpected medical reasons, and, most importantly, unexpected medical costs abroad. A single trip abroad can turn a minor illness into an enormous medical bill, in a country where you have no existing health cover at all.

A basic travel policy covers the essentials; a comprehensive one goes further.

The workbook lists what a comprehensive travel insurance policy provides, as a checklist of five covers:

1. Emergency medical cover
2. Losses incurred due to unforeseen cancellations, or having to cut the trip short
3. Death and disability cover
4. Personal liability cover
5. Luggage cover

Each line answers a different failure mode of a trip: falling ill, having to cancel or cut it short, a serious accident, accidentally causing harm or damage to someone else, and simply losing your bags. The workbook gives no premium figures, sum-insured limits or claim procedure for travel insurance in this booklet — only this list of what a comprehensive policy is built to cover.

Amounts are illustrative — the workbook gives no premium or claim figures for travel insurance.

Reena books a two-week trip to Europe and buys a comprehensive travel insurance policy for a premium of Rs 1,800.

On day four, she falls seriously ill and is hospitalised abroad. Her emergency medical cover pays the hospital bill directly, sparing her a bill that could easily have run into several lakh rupees without cover — exactly the risk the workbook flags as "most importantly" unexpected medical costs abroad.

Her connecting flight home is then cancelled for reasons outside her control, and she has to book a later one. Her cancellation cover compensates the extra cost. Separately, an airline mishandles her checked bag; her luggage cover compensates the loss. Three different claims, from three different lines of the same comprehensive policy, on a single trip.

Chapter 6 (Insurance Related Products) lists travel insurance in its classification of insurance policies, immediately after health insurance and before property insurance, and spells out the comprehensive policy's cover list in full. Expect a question that lists several travel mishaps and asks which line of cover applies to each.

• Cancellation cover is for cancelling due to unexpected medical reasons, as the workbook words it — not for cancelling because you simply changed your plans.
• Medical costs abroad are what the workbook flags as "most importantly" — do not treat luggage cover as the headline benefit of a travel policy.
• Personal liability cover pays for harm or damage you cause to someone else, not for a loss you suffer yourself.
• This is a separate insurance product from health insurance, even though both can pay a medical bill — a domestic health policy typically will not respond to a hospitalisation abroad the way a travel policy is built to.
• The workbook gives no premium or claim-amount figures for travel insurance in this booklet; do not import one from outside the text.