Source – pexel
Whenever you buy an insurance policy, there is a certain amount fixed by the insurance company that you need to pay in the form of “premium”. Essentially, this can be considered as the cost of the insurance policy. An insurer determines the premium based on, in simple terms, the perceived ‘risk’ in insuring an entity.
When it comes to travel insurance, the story is no different. There are several factors that an insurance company takes into consideration in fixating the travel insurance premium amount. For instance, the location you would be travelling to will play a crucial role in determining the premium. Thus, a holiday to the United States will entail a higher premium as compared to say, Thailand or Sri Lanka.
In order to ensure that you choose the best plan for your next vacation, let us try to understand the factors that come into for calculating the premium. The following is a list in no particular order, that will explain the what and how of travel insurance premium calculation –
· Health and Age
The age of the insured has a direct impact on the premium. Simply put, if you are young, you will get a travel policy at a lower premium as compared to a senior citizen. When it comes to health, if you have a pre-existing medical condition, your international travel insurance cost is going to rise.
The place of travel dictates the risks a traveller is exposed to, because of which the travel insurance calculator’s premium amount varies country-wise. To make things clearer so as to how this works, let us take health care into consideration. Health is a major risk while you are travelling, so travelling to a country where healthcare is expensive translates to a higher premium.
· Sum Insured
This is one of the most important factors that you should decide on before you buy a travel insurance policy. The sum insured is the maximum amount or the figure at which claim settlement is capped by the insurance company. This amount should be fixed by you with careful consideration of all aspects of your trip; healthcare expenses and the destination being the most important ones amongst those. As you might have guessed, the sum insured is directly proportional to the premium.
· Tenure of the trip
Again, the duration of your holiday or trip will directly affect the premium in the sense that more the number of days, higher will be the premium. A quick tip for you here is to go for a multi-trip policy plan if you plan to visit a place more than once during the course of the year. This will help you save on the premium.
· Type of plan
As discussed above, there are several plans offered by travel insurance companies to suit your needs. Some of them are student policy, senior citizen policy, multi-trip policy, Schengen policy and others on similar lines. Naturally, the premium differs accordingly.
· Add-on Coverage
There are optional add-on covers that you can avail in a travel policy. These can include coverage for adventure sports, loss/theft of expensive gadgets, jewellery, home insurance and so on. Again, these covers would attract a higher premium.