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Pros and Cons of Credit Card Travel Insurance
September 10, 2018

So you’ve decided to take an overseas holiday and you need to sort out your travel insurance. One of the most commonly asked questions out there around travel insurance is whether to purchase it through an independent provider or to go with your complimentary credit card cover.

Complimentary travel insurance cover is offered as a “free bonus” from many credit card companies (especially ones named after jewels and precious metals; diamond, gold, platinum). While it is advertised as being “free”, it doesn’t necessarily mean that it is. There are a number of catches and criterias that you should be aware of before deciding which is the best travel insurance option for you.

Let’s discuss the pros and cons of travel insurance provided by credit card companies.

A traveller paying for travel insurance on their credit card

The pros of credit card travel insurance

Great coverage

The coverage level is not only comparable to individual policies, it’s often better. For example, credit card travel insurance covers around $500 cash per person (with $1000 being the maximum for a family), while independent insurers don’t always offer this benefit, with the amounts varying from card to card.

Collect and spend reward points

As well as free cover, your credit card usually comes with other added benefits - like reward points. Your holiday is the perfect opportunity to redeem some of these reward points!

Travel anywhere

Credit card travel insurance isn’t location specific, so - unlike standable cover - you can go anywhere without taking out separate policies or having to pay higher premiums for longer trips. Some specific regions may be excluded, so be sure to check each policy for details.

Credit cards are also accepted worldwide - making it extremely convenient if you find yourself in a bit of trouble while travelling!

The cons of credit card travel insurance

Annual fees

As complimentary travel insurance only tends to come with higher-end credit cards, it usually means you’re having to pay hefty annual fees. 

Higher excess

In comparison to stand alone insurance providers, credit card insurance often has rather large excesses. So while “free travel insurance” sounds good, it definitely won’t be free if you need to take out a claim.

Pre existing medical conditions

Bad news if you have a pre existing medical condition - many credit card companies don’t automatically cover these, and won’t allow you to pay extra for an exception. The companies that do cover pre existing conditions will list them in their terms and conditions, so make sure to check this before taking out cover.

Not everything is covered

A lot of policies through credit cards don’t include coverage for lost items, adventure activities and domestic travel. Don’t assume anything is automatically covered in your policy - it really does vary between providers! 

Weigh up the pros and cons

At the end of the day, it’s up to you to make sure you have the right cover and protection. Make sure that you always take the time to read the fine print of any policy before committing to one. 

If you haven’t already purchased a credit card, work out if you’ll actually end up saving money in the long run. Never forget the financial risk that comes with drumming up credit card debt!

To help you find the best cover for your travel needs, take a look at our online comparison tool, where you can compare travel insurance from Australia’s top providers.