Travel medical insurance: 6 critical things to watch for in the fine print
Tourists read on a beach in Khao Lak, Thailand, on Thursday, Dec. 25, 2014. (AP Photo/Wong Maye-E)
Josh Dehaas, CTVNews.ca
Published Sunday, January 11, 2015 6:32AM EST
Last Updated Monday, January 11, 2016 6:32AM EST
Foreign hospital bills can easily run into the tens of thousands of dollars and Canadian public health insurance won't cover them, so the government recommends having private coverage every time you leave the country -- even for a day.
But there are plenty of horror stories from Canadians who think they're covered, only to get stuck with a bill.
Bruce Cappon, president of First Rate Insurance, says these horror stories happen because travel insurance companies are often able to hide behind fine print that consumers haven't read or don't understand.
He's pushing for legislative changes that make it harder for travel insurance companies to take advantage of people, but in the meantime, he says there are some decent plans out there that cost as little as $25 per week.
That means consumers can vacation with peace of mind as long as they shop around and read the fine print carefully. Here are six things to know:
Avoid plans with 'change of health' clauses
Cappon says to skip plans that require calling the insurance company to report a "change of health."
These clauses allow companies to jack up the price of the insurance if a customer does report a health change.
They also allow the company to void all the coverage if the patient failed to report even a minor ailment like a stomach flu before making a claim.
That irks Cappon. "If you had an automobile policy that had a clause that said, 'By the way, if you have a parking ticket and you don't call us to tell us … then your whole policy is cancelled' … we wouldn't put up with that."
Make sure to check which 'activities' are excluded
Some policies have clauses stating they are void if the client takes part in dangerous activities, such as white-water rafting, bungee jumping or scuba diving without certification.
But Cappon says the lists of activities considered risky is getting longer and longer -- he even saw one recently that included "ostrich-back riding."
Consumers sometimes fail to realize these clauses are in their policies.
Other times they don't understand what they mean. For example, people may not realize a policy forbidding "trekking" could lead to a claim being denied if they break a leg while on a nature hike.
Understand what it says about alcohol and drugs
Clauses that void coverage for drinking too much alcohol are "fairly standard," but some have more "generous" wording than others, Cappon says.
A Toronto man learned this the hard way. He said he broke his arm in Cuba within 15 minutes of arriving at his hotel, and the $700 he paid for treatment was never paid back to him because he had consumed a single alcoholic drink.
The man's vaguely worded policy said the company was off the hook if the customer was "affected by … alcohol, prohibited drugs or any other intoxicant."
Watch out for long 'stability' periods
Stability clauses specify a time period for which a pre-existing condition, for example heart disease, needs to be "stable" before coverage kicks in.
Shorter is better, and one-week stability periods are common, so don't accept those that have 90-day or 180-day stability periods, Cappon says.
Also beware that each policy's definition of "stability" is different. For example, some specify that a client is no longer stable if he or she goes for a diagnostic test -- even if the test finds nothing wrong.
Cappon also points out that employer-based travel insurance can be good, but some plans also include stability periods, so those planning to use work coverage need to call and check it out.
Avoid policies with 'murky' questionnaires
Some insurers use medical questionnaires that are theoretically meant for them to help choose which level of insurance to sell a person, but in practice are set aside and reviewed only after a claim is made to look for "misrepresentations" that may let the company off the hook.
Misrepresentations are easy to make accidentally, when there are "murky questions" on the form, says Cappon.
For example, a questionnaire may ask: "In the last 36 months, have you been hospitalized, diagnosed, or treated for a heart condition?"
Cappon says most people focus on the 36 months and don't understand that the blood pressure medication they've been taking for a decade still counts as having been "treated" for a heart condition in the past 36 months.
Another pitfall happens with questions like this: "In the past 24 months, have you been diagnosed, treated, or hospitalized for a gastrointestinal condition including cancer, gastrointestinal bleeding or chronic bowel disease?"
People tend to miss the word "including," and focus on the specific conditions that are listed out, says Cappon. That means someone with even a minor gastrointestinal problem like hemorrhoids can lose coverage if he or she checked "no."
When questionnaires are necessary, Cappon explains each question to his clients, asks them to read it more than once, and suggests consulting doctors to clarify their medical history to reduce the risk of getting it wrong.
Attempting to extend credit card policies can be risky
Cappon says travel insurance coverage that comes free with some credit cards may be enough for some "very healthy people," but it usually only covers a shorter period, like 15 days, and customers can get into big trouble when they try to purchase more over the phone.
"That's a very risky process," he says. "Remember those murky questions? You're going to be asked those questions over the phone."
Cappon says it can be even easier to slip up and get something wrong over the phone than on a written questionnaire.