/ Money, Travel & Leisure

Should you ‘bank’ on your travel insurance?

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Profile photo of Leigh Jackson Leigh Jackson Senior Money Researcher
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Are you overpaying for your travel insurance? A packaged bank account could be the answer.

For older holidaymakers the cost of annual travel insurance is often more than £100.

Insurers, believing older holidaymakers are more likely to fall ill or have accidents abroad, either hike the cost of travel insurance or don’t offer it at all.

So, for older travellers, could the answer to cheaper travel insurance be in a packaged bank account?

Packaged up and ready to go

In 2013, the Financial Conduct Authority outlined new rules to curb mis-selling of packaged accounts – but that doesn’t mean the travel cover offered in these packages isn’t a good deal.

It certainly stands up on cost. My 70-year-old grandparents, Whitfield and Winnifred, when booking their holidays for 2016, expect to pay £378 for annual worldwide policy through a travel insurer. The equivalent for a packaged bank account is just £183.

Even their 65-year-old friends, Ethel and Jim, planning a holiday to Europe in the summer and a trip to South America in the winter, could save by opting for a packaged account.

If Ethel and Jim bought direct from an insurer it would cost them £236.42. Or pick up a packaged account for the same £183 average fee, and make use of a whole host of other benefits including car breakdown and mobile phone cover.

Keeping it separate

Standalone travel insurance can still work out to be great value.

My 50-year-old aunt and uncle, Alford and Hazel, would pay £183 for a packaged account on average but, only £143 through a standalone traditional insurance policy.

Their friends, Oleg and Tina, who are 60, could also pick up a cheaper policy using the traditional route at £174.

Things to consider

So, it’s worth weighing up your options and considering what’s right for you.

It’s good to see that there are alternatives out there for older travellers. Would you consider buying a packaged bank account for the travel insurance cover?

If you’re thinking about a packaged account then make sure you:

  • Read the terms and conditions, do you meet the minimum monthly funding?
  • Consider the additional products on offer, do you need them or do you have them elsewhere?
  • Read the insurance policy documents – are you within the age limits for the travel cover?
  • Keep your bank updated. If your circumstances change, make sure you notify your bank to see how it could impact your travel cover.
Comments
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Member
KenB says:
16 November 2015

The problem with any bundled product from banks is that they are prone to changing them and hiding the sting amongst the small print. Banks just are not reliable enough to sell complex products. However you can meet minimum funding requirements by sending a smaller amount round and back by standing orders

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AnthonyHowe says:
17 November 2015

Bank products don’t cover medical conditions without an extra fee, wiping out any so called benefit .

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Leigh Jackson says:
17 November 2015

Actually many of them cover mild conditions without any additional premium at all. As part of our wider research we looked at high blood pressure and all but one of the bank products covered it free of charge. The best advice would be to check with the bank before you buy – you might still be able to make a saving

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John Ward says:
18 November 2015

My Nationwide Flexaccount includes travel insurance. This is not a packaged account, just a run-of-the-mill current account. We already have joint worldwide travel cover which we regard as our proper and comprehensive insurance and the one on which we would make a claim. In the small print of our main insurer’s policy, however, I have noticed that where cover is provided by another insurer the claim will also be referred to them and the settlement of the claim will be divided between them. I see this as an unnecessary complication and there could be a disagreement between the two insurers as to whether the claim will be met and to what extent; it can only prolong the process. It might be tempting not to disclose the existence of the other cover but that would be very risky because all insurers contribute to a common database and a check would quickly reveal the duplicate cover and the claim could then be rejected on the grounds of incomplete disclosure.

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Patrick Steen says:
18 November 2015

I’m not sure if anyone else does this, but before a lengthy holiday outside of Europe I move my basic current account to a packaged account to take advantage of two things – the travel insurance and mobile phone insurance. I then cancel this and move back to a basic account when I get back. It works out around the same price, if maybe a bit more, but I like the cover it gives too over some of the cheaper travel insurance deals.

There are of course downsides. Moving to a packaged account can be a lengthy process (and rightly, so that you fully know what you’re signing up to). You can also forget to cancel, which means you can be charged for another month or even more (which I have done before). Obviously you’ll need to check if you’re eligible first whatever the case.

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John Ward says:
18 November 2015

I do do a bit of money movement before a long absence but not for insurance advantages. I try to empty my low- or non-interest bearing accounts into something more rewarding leaving just enough to cover the scheduled debits after allowing for any scheduled credits. It hasn’t gone wrong yet but I sometimes wonder whether it’s worth the time and concentration that it takes. I still leave a cushion in the account to soften any unexpected bouncing. Really lengthy absences are a thing of the past now so the benefits are negligible.

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Mark Godden says:
20 November 2015

I think many of your travel insurance reports are misleading because they don’t concentrate on typical travelers. They almost always cover basic costs for older people with no medical issues – but how much of the market fits in this category? For example, the present report contains costs for a 70-year-old couple with no medical issues – I doubt that there are many such couples where neither partner has a reportable medical issue. It also covers individuals – what prportion of policies for the over 50s are bought by individuals rather than couples? Surely a more common scenario would be couples over 50 where one partner has a medical issue.

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John Ward says:
20 November 2015

You might be right, Mark, in terms of Which?’s analysis not being properly representative of the market but I would imagine that to get any closer to reality might be very difficult because every declarable medical condition [and its history in each individual’s case] has its own risk level and combined with the age of the insured creates a unique premium. The permutations are endless. The sample profile used to compare policies and premiums can produce a ranking for a small portion of the market but whether that can be extrapolated to cover the wide range of variations is uncertain, and I suspect unlikely. And what an insurance company charges today to cover certain ‘age & condition’ templates might not be replicated tomorrow as the company’s risk profile goes up and down all the time depending on the company’s continuous assessment of its book. I should have thought that at the elder end of the market it was more important to compare the cover and service provided rather than the price. Obviously customers are looking for the best value but that will not necessarily be found with a low premium as might be the case with general insurance. I would think the proportion of policies bought by solo travellers is probably under 20% if our holidays are anything to go by, but again that is unlikely to be representative: we know single people who have properties or relatives abroad and regularly travel back and forth [and that is possibly a growing proportion], there are lots of holiday packages that are tailor-made for singles, and there is a rising number of group ‘special interest’ holidays that attract individuals. I believe there is a considerable amount of non-declaration of medical history as well because we all know that once you declare a medical condition the premium goes through the roof and the desired holiday becomes unaffordable. At best, for the over-50’s, I think the Which? travel insurance reports are a broad guide and are useful for their information content rather than their price comparisons and that is still a useful function. I look for an insurer that provides good cover with few exclusions, has a good record of looking after people when emergencies occur, is easy and convenient to deal with, and has a good reputation for claims settlement.

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