Thursday, December 17, 2009

Cheap Travel Insurance Investigated

Consumers gravitate to buying cheap travel insurance to make their holiday spending money go even further, but is it best value to choose on price alone?

More expensive policies available sometimes have tangible financial benefits in return for paying the higher price, such as medical cover for 5 or 10 million, as opposed to 2 million.

To evaluate whether that extra theoretical cover converts in to value for money, first we would need to find a policy holder who required a 3 million spend on medical costs in one short holiday incident. Such a person would be very rare indeed! We take from this point that the theoretical benefit is hardly ever used in practise.

Hidden aspects to a highly priced policy often include the advertising costs of making the insurer's product well known to customers. The benefits here are intangible and perhaps not benefits in any direct sense at all. Things like commercial heritage, peer familiarity, popularity in the marketplace, and which figures are used to endorse the service add nothing when it comes to cashing the pay-out cheque.

Those in the camp for cheap travel insurance, assert that a policy of reduced advertising filters down to business costs which can be passed along to the customer as financial savings on price. There is also an argument that expensive marketing campaigns reduce the ability to deliver back-office services to process insurance claims. Resulting in well known brands theoretically stretched by the enhanced workload, whilst lesser known travel insurance companies provide improved claims processing service, based on more resources allocated to that department and fewer claims in total, stemming from a smaller customer base.

Insurers employing a physical shop-front to help sell their insurance products, such as banks and travel agents are at a further economic disadvantage when contrasted with exclusive internet-only competitors. Where does the cheaper price occur? A good example is the difference between filling in the initial application. Expensive policies available might well engage the talents of an assistant or phone operator to complete personal details needed for an accurate quote. Online, the customer does this independently, equating an instant cost saving.

Further Information

  1. Cheap Travel Insurance Advice - Debates the issue of finding savings in the present economic landscape.

Technorati tags; cheap travel insurance, making a claim.

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