Life insurance and traveling

Picture this. You just booked your ticket to the sun-kissed beaches of Brazil. Your itinerary is all planned out. Rio de Janeiro, Brasilia, Sao Paolo. The hotel bookings are done. And fortunately, you’ll be right in time to attend the music festivals spread out across tourist season. But before you can start packing your bags, your spouse brings up the topic of life insurance.

Even though traveling for leisure or business doesn’t sound as crucial to life insurance as medical history or smoking habits, insurance providers beg to differ. There’s a chance your insurance plan might not cover you during your trip. If you end up traveling and taking part in extreme adventure activities such as sky-diving or river rafting, your coverage might be voided.

Before your insurance plan is approved, you may be asked several questions about your previous trips abroad and future travel plans. Your plan eligibility, total coverage, premium costs, and extra riders depend on several factors and travel is one of them. The country you want to visit, the length of your stay, the purpose of visit, and your career choice play key roles in determining what kind of coverage you qualify for.

Why is life insurance necessary during travel?

Before we break down the relationship between travel and life insurance, let’s discuss why life insurance coverage is necessary during travel, even if you have travel insurance.

Travel insurance is meant to help you deal with the uncertainties of a foreign trip. When traveling, you might need urgent medical care to cover an unforeseen injury. The airline might lose your baggage en route. You might even end up being stranded due to last-minute flight cancellations. Or your babymoon might take a turn if you start experiencing pregnancy complications. All these scenarios are covered under travel insurance.

But this plan does not cover your dependents back home. If you pass away during your trip, your family receives no benefits, nor payouts with travel insurance. On the other hand, having life insurance in place to cover you during travel can help your family feel a little safer. Moreover, you have peace of mind knowing that your loved ones will be looked after even if something happens to you.

Does life insurance cover foreign travel?

While most insurance providers cover foreign travel, it is best to confirm with the company yourself or through your advisor. Insurance policy coverages differ from company to company.

It’s important to be completely frank when speaking with an advisor or broker about your foreign travel plans when applying for life insurance. Hiding any details, might turn out to be a problem in case of a claim. If the policy you’ve chosen doesn’t cover you abroad, they can also guide you towards changing your plan to accommodate your travel requirements.

What questions do insurance companies ask regarding travel?

While applying for a new life insurance policy, the underwriting process involves filling out a detailed questionnaire or verbally answering questions about your travel history. You’ll be asked about the countries you’ve visited in the past two years, how often you’ve visited the countries, and the purpose behind those visits.

You’ll also be expected to disclose any travel plans for the future. Along with the length, the frequency of the trips matters too. Most companies allow between three to six months of travel (as with snowbirds, for instance) before subjecting you to being underwritten as a foreign national. Any stays extending beyond the six-month limit will compel the insurance provider to scrutinize your application on a case-by-case basis. Being deemed a foreign national can limit your coverage, increase premium costs, and disqualify you from being able to add certain insurance riders.

The purpose of the foreign trips is an important factor. Those traveling for leisure on a one-off trip will not be penalized in the same way as a professional who travels abroad regularly.

Participating in high-risk activities during your travels (such as adventure sports) might invite added scrutiny.

Apart from these points, your occupation can play a role too. Pilots, volunteers, and soldiers who are stationed in high-risk countries might not get the cover they want, though some specialized providers offer insurance in such circumstances.

Insurance companies are obliged to take a holistic view of your entire application. The process is not meant to discourage foreign travel. Instead, it helps the companies analyze the level of risk they’re taking by providing you coverage.

Why do insurance companies include travel details in the application process?

Insurance providers want to minimize the chances of having to settle a claim by reducing the risk they take. They’re looking for factors that might categorize you as a risky candidate. Your family history, medical conditions, and travel plans are indicative of the likelihood of you or your family staking a claim.

When traveling abroad, your chosen destination might not have the same medical facilities or doctoral expertise as Canada. The country might be experiencing war or terrorism. Political instability, endemic diseases, and lack of sanitation are factors that are viewed with caution by the insurance providers. In simpler terms, any place or activity that increases your chances of dying adds to your risk profile.

Do your travel plans affect your coverage?

Even if you do manage to get insured, the coverage and policy terms can vary according to your destination. Traveling to low-risk countries means your coverage remains intact. But as the destination country becomes more dangerous, your policy will become more restrictive.

Traveling to dangerous countries, categorized as the riskiest, will lead to disqualification from most coverage plans. Medium risk countries may be covered but with limited flexibility. It’s always better to check on these details with your insurance provider to understand which countries are safest to visit.

Which countries void your life insurance coverage?

The Canadian government categorizes the risk of foreign travel in four parts:

1. Exercise normal security precautions – The safest category of countries.
2. Exercise high degree of caution – Countries that are generally safe but pose a little risk are clubbed here.
3. Avoid non-essential travel – Countries that are deemed unsafe for leisurely travel come under this category.
4. Avoid all travel – This category includes countries strife with war, terrorism, and general instability.

People traveling to countries from the first two categories usually qualify for life insurance, provided they pass through medical underwriting. The coverage and premiums are standard, as per the policy rules.

When traveling to a country categorized as ‘Avoid all non-essential travel’, the term of stay and purpose of travel come into question. Periods of less than three months are insured at the standard premiums. But any more than that will lead to additional charges by the insurance provider. The extra charges can be dropped after reconsideration provided the person hasn’t traveled to a risky country in the past year and doesn’t plan on traveling to one in the near future.

Most countries fit into the top three categories. But there are a few countries such as Sudan, Afghanistan, Iran, Iraq, North Korea, Nigeria, Syria, and Yemen among others that are classified as high-risk.

What occupations are not covered by life insurance?

If your occupation forces you to travel a lot, then you may be in for a rude shock. Several occupations are classified as hazardous and aren’t eligible for any coverage. Diplomats, foreign correspondents, missionaries, volunteers, and the armed servicemen do not qualify for life insurance through typical Canadian insurance providers. Due to the high degree of danger associated with their jobs, there is a much higher chance of them dying abroad.

Do you need insurance to travel to Canada?

Certain visas that allow for travel or stays in Canada do require insurance coverage. Super visa insurance is mandatory for those seeking approval for their super visa status. While other visitors to Canada need insurance, it is not mandatory for entrance into the country.

Will COVID-19 travel restrictions affect my life insurance application?

When the the COVID-19 Pandemic was still a global health concern, insurance companies hesitated to approve life insurance applications for anyone who had plans to travel to COVID hotspots in the near future.

But after the World Health Organization said the pandemic is not a global health emergency anymore, things are back to normal. Your life insurance application will not be affected because of COVID-related travel restrictions or concerns.

Takeaways on travel and life insurance

Your life insurance policy is dependent on your travel plans. Past history, length of stay, the purpose of visit, and future travel plans play critical roles in deciding whether your insurance cover will be valid abroad. Moreover, the coverage and premium will reflect the risk you’re taking with future travel plans to a foreign country. Participating in high-risk activities or traveling to a dangerous location can void your policy.

It’s never a bad idea to discuss your travel plans with your insurance advisor. You can remove any misconceptions about how traveling abroad may affect the coverage you have in place or your future eligibility.