Why having insurance is crucial while traveling abroad

In an interview to CNBC-TV18, Personal Finance Expert, Harshvardhan Roongta of Roongta Securities on importance of having insurance while travelling overseas.

Below is the verbatim transcript of Roongta's interview with CNBC-TV18. Q: The summer is here and before people start heading out for their holidays, I want to ask you how important is it for them to carry overseas travel insurance? And what should people look for while selecting a plan?  A: Summer is here and everybody is looking forward to summer holidays. I would like to mention here and highlight the importance of overseas travel policy. This is specially for people who are traveling out of the country, it is imperative that they do not miss out on buying this policy. This is a holistic travel cover.  I would like to highlight four-five points here. One is the cost of medical treatment; if a person has travelled overseas and for some unfortunate reason falls sick and needs medical attention then the cost incurred overseas is much higher than what it is in India. The policy aims to cover all these medical cost whether one is hospitalised or not. If there is generally a case of food poisoning or fever or skin rashes and one need to take medical assistance even the cost which is incurred for non-hospitalisation expenses are also covered. National Pension System Vs PPF: Which is better? The other part is a personal liability. However, because of some act of a person if he causes damage to some other person’s property -- usually one has seen in the developed countries that there is a case filed against that person to claim the damages for example if one is smoking in a restaurant, which is specifically marked as non-smoking area, the fire alarm go off and water sprinklers get activated and if this causes damage to the furniture of the hotel or the restaurant then they sue for the damages. Therefore, the policy aims to cover such kinds of act as well.  The third point is if one loses his passport or baggage, which is checked-in with the airline, there could be delay in baggage coming. So, there is a lot of cost that the person needs to incur to get those back into order. The fourth point is repatriation of remains. For unfortunate reasons if a person dies overseas, one need to get the body back to India and there is a lot of procedure to be followed and cost to incur. Therefore, these costs are also covered into overseas travel policy. So, the idea is it is a holistic cover, which a person should take while he is going overseas. With regards to your question as to what should one look out for. We have seen practically seen all the general insurance companies operating in India offer this cover for people traveling. There are few things which make the difference between a company A and company B and within each company also there are different plans, which are offered. I will give an example of a product from TATA AIG General Insurance Company. They have four products into their portfolio; one is a Silver plan, the other is Silver Plus then Gold and Platinum. The basic difference is the scope of coverage. If I take example with premium then a 40-year-old wants to travel for two weeks anywhere in the world then a silver plan, which covers the medical cost up to USD 50,000 would cost about Rs 1,200 and if he takes silver plus, which is USD 100,000, the cost would be about Rs 1,400. If he takes a gold plan, which covers up to USD 250,000, it is about Rs 1,500 and platinum, which is the holistic cover, the highest in their lot and which is about USD 500,000 would be about Rs 1,700. Q: These are all health plans? A: No, these are the travel plans, which cover all the features which I have spoken of and in fact something even more beyond these.   _PAGEBREAK_   Caller Q: I already have State Bank of India (SBI) loan on me for a flat of which I will get possession in three-four years. Is it a wise decision to buy a second house taking another home loan? An equated monthly installment (EMI) on my present loan is Rs 23,000, which will start in July. My salary is Rs 72,000 per months? A: You have got an inflow of about Rs 72,000 a month and the query mentions that the existing loan that you have from State Bank of India (SBI), Rs 24,000 is going to start as an EMI. If I look at it from financial planning perspective, I am not looking into your need to move into a house of your own. I am looking from financial planning perspective. I do not think you have too much scope to buy another house right now for the purpose of moving in and beside the fact that it will cause a lot of strain onto your monthly income because you have an EMI of Rs 24,000. The new loan will also entail another EMI, which will start immediately. Therefore, I do not think your finances permit you to buy a house of your own to move in. However, with respect to your requirement to move in, if you already have booked an apartment, which will be given to you in the next three-four years, I would suggest that if you can stretch and live on the current status that you have that is on rent and move into the apartment later on which will be given to you after three-four, which could be more prudent financial planning practice. Therefore, with regards to tax benefit; you will get the tax benefits only after you get possession of the flat. However, keeping in mind the broader perspective, you can still and you should rather wait for about three-four years and take possession of that already booked apartment.