What affects the cost of your travel insurance?

Richard Laycock 26 September 2017 NEWS

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Why where you're going affects the cost of your cover.

When you last bought travel insurance did you wonder how the insurer came up with the cost of your policy?

With the potential of Mount Agung erupting and creating another Bali ash cloud situation grounding flights, we thought we'd look into why you pay what you pay.

When calculating the cost of a travel insurance premium, the insurer will look at two main factors: your destination and your age.

Why does your insurer care about where you're going? War? Famine? Anacondas? While those factors do matter (save maybe the anacondas), the major reason your travel insurer is interested in where you're going is the cost of medical treatment.

So, which countries are the most expensive?

"Obviously in terms of the countries, we are talking about the USA where medical care costs are astronomical, but also parts of Europe (with the exception of the countries where Australia has a reciprocal healthcare agreement – a de facto Medicare arrangement)," travel safety expert at Travel Insurance Direct (TID) Phil Sylvester told finder.com.au.

One country TID has had to raise its premiums of late may come as a surprise to you: Nepal.

"The one exception and destination where we have raised premiums recently is Nepal, and that’s because of a recent surge (past 18 months) in high-cost helicopter evacuations. It used to be that there were a handful a season, now there are a handful a month," said Sylvester.

The next major factor in calculating your premiums is your age and probably unsurprisingly, the older you get, the more your travel insurance is going to cost.

"Sadly no matter how much exercise you do as a 55 year old, statistically you are in a band with a lot of other people who are more likely to have a heart attack," Sylvester said.

Destination and age aren't the only factors that go into determining the cost of your travel insurance and way down on the list at reason number three are: natural disasters and terror attacks.

Travel insurers may raise their premiums at their own discretion in regards to natural disasters. But in most cases, if a destination is that dangerous, there is probably a Do Not Travel warning from the DFAT Smartraveller website, which would mean you can't get cover anyway.

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