Should Wealthy Canadians Buy Travel Insurance?

For many wealth Canadians, traveling is fun. But, as we age, the risk of medical emergencies occurring while traveling grows larger. Travel medical insurance companies know this too. So, the cost of obtaining medical insurance also grows larger as we age and our health deteriorates. As a wealthy Canadian investor, you may be wondering whether you should obtain travel medical insurance to provide financial protection against the risk of medical costs while traveling outside of Canada. So, this post will examine whether wealthy Canadian investors should obtain travel insurance.

The Risks to Canadians Traveling Without Medical Travel Insurance

Traveling without medical travel insurance can expose you to significant risks. For instance, if you face a medical emergency overseas, the high cost of medical care and limited access to quality healthcare can pose significant challenges. The cost of medical treatment can be staggering in countries like the United States.

Medical Costs Scenario

Scenario: Mr Singh, a 70-year-old wealthy Canadian investor, travels to the United States for a vacation. Unfortunately, during his trip, he suffers a heart attack and requires emergency medical attention. Here are some potential costs he may face:

1. Emergency Medical Treatment: Mr Singh is rushed to the nearest hospital, where he receives immediate medical attention. The cost of emergency medical treatment in the United States can vary significantly depending on the severity of the condition and the hospital’s location. In a worst-case scenario, the costs for emergency treatment could range from $50,000 to $150,000 or even more, considering hospitalization, diagnostic tests, surgical procedures, medications, and doctor fees.
2. Medical Evacuation or Repatriation: If Mr Singh’s condition is severe and he requires transportation back to Canada for further treatment, medical evacuation or repatriation costs could be substantial. In extreme cases, a medical air ambulance can cost anywhere from $50,000 to $100,000 or more, depending on the distance and medical equipment required.
3. Hospitalization and Follow-up Care: Following the emergency treatment, Mr Singh may require hospitalization and ongoing medical care. Hospital stays in the United States can be extremely expensive, with costs averaging around $4,000 to $6,000 per day or more in some cases. If Mr Singh’s condition requires an extended hospital stay, the costs can quickly accumulate to hundreds of thousands of dollars.
4. Specialty Consultations and Procedures: Mr Singh may need consultations with specialists or additional procedures such as cardiac catheterization, angioplasty, or bypass surgery. The costs for these procedures can vary widely, but in a worst-case scenario, they can reach tens of thousands of dollars or even exceed $100,000.
5. Medications and Rehabilitation: Mr Singh may require medications, both during his hospital stay and after discharge, for proper recovery. The cost of medications can vary significantly. For high-priced drugs, the expenses could range from a few hundred to several thousand dollars. Additionally, if rehabilitation or physiotherapy is necessary, further costs could be incurred.

Why Should Canadians Have Travel Insurance?

The primary reason for having travel insurance is to protect against the financial risks associated with unexpected illnesses or accidents while traveling. But, if your investment portfolio has more than $100 million in it, is a $500,000 medical bill catastrophic? Maybe not. So, an alternative to obtaining medical travel insurance is called “self-insuring”. This is when you set aside funds to cover potential losses instead of purchasing insurance. While this approach may seem attractive to wealthy investors, it can backfire for the average Canadian. Since, a major health crisis where medical bills escalate into hundreds of thousands of dollars can be catastrophic.

Understanding Medical Travel Insurance

Medical travel insurance is a type of coverage that pays for medical and emergency expenses incurred while traveling. Here are some typical areas that these policies cover:

1. Medical Evacuation: This covers the costs of medical escort and transportation back to Canada.
2. Pre-existing Medical Conditions: Policies often provide coverage for pre-existing medical conditions. However, make sure you understand the terms, limitations, and any stability clauses. This ensures your claims won’t be invalidated due to a pre-existing condition clause.
3. Repatriation in Case of Death: This covers costs related to the return of your remains, local cremation or burial, and expenses for someone to identify your body.

Where Can Canadians Obtain Travel Insurance?

Canadians can purchase travel insurance through a travel agent, insurance broker, or their credit card company. For wealthy investors, consulting with an insurance agent is often the best choice. This way, you can be sure that you receive the appropriate coverage for the right price. Your travel agent will not have the same expertise that a licensed insurance advisor does. So, purchasing a blanket policy from your travel agent may not always provide you with the most appropriate coverage. The same rule of thumb applies to the coverage from your credit card. This generic policy may be appropriate for many, but may not be the most appropriate coverage for your unique situation.

Our family office recommends our clients consult with a licensed insurance advisor who can incorporate recommendations about travel insurance into a broad review of a client’s financial plans. This way, we can be sure that insurance coverage is tailored specifically for each client’s unique circumstances and needs. We also recommend consulting with your insurance advisor about your home & auto insurance needs too.

Should Wealthy Canadian Investors Obtain Travel Insurance?

Whether travel insurance is worth it for you largely depends on your personal situation and risk tolerance. If you’re comfortable with the potential risk and can easily manage a potential bill upwards of $500,000, then you may opt for self-insurance. If not, travel insurance is advised.

However, it’s important to remember that as we age, the likelihood of needing medical attention while abroad increases. So, even if you feel financially comfortable, the potential risks could outweigh the cost of travel insurance most of the time.