Everyone loves free stuff, which is why it seems like a great perk when financial institutions offer their customers travel insurance as a complimentary extra with their credit card.
There’s an old saying though: there ain’t no such thing as a free lunch, and while you may get some rudimentary cover from these products, you need to double check that it suits your needs.
Yes, but when you think about it, it’s really paid for in your annual fees. Additionally, you may need to pay for part of your trip with that credit card before departing in order to qualify for the insurance.1 In fact, ASIC reports that more than half the providers they reviewed required Aussies to pay the full airfare on their card before they could access cover.2
In reality, your credit card provider can make back a lot of money with these two requirements from a seemingly ‘free’ product.
The more important question you need to ask is, “How exhaustive is my travel cover?”
Credit card issuers and insurers have gotten into trouble in the past because they failed to adequately disclose the extent of their cover; things like who was covered by the policy (i.e. dependents, partners, or just you).2
Another issue commonly encountered with this product is exclusions and restrictions to your travel policy. Traveller.com.au stated that credit card travel insurance will regularly restrict your cancellation cover, exclude death cover, won’t insure you for trips longer than a certain duration, and more.3 It’s also likely the credit card provider will only cover you for the trip you paid for on the card,1 so be mindful of this if you require insurance for multiple legs.
All this aside, you may only be interested in basic cover, and your credit card provider may offer you everything you believe is necessary for your trip. If this is the case, it can be a low-cost alternative to your travel cover needs!
We highly recommend you follow the below steps, to ensure you’re protected on your trip.