If you are planning to travel, you should have a checklist of things you have to do, such as taking out travel insurance and knowing how much money you can use when you travel abroad.
It is important to know how to ensure you are covered when you travel over the festive season, as the end of the year typically sees an increase in domestic and international travel, with many South Africans using the school holidays and the festive period to explore and discover new destinations.
It is possible that international travel will now move closer to pre-pandemic levels once again after years of travel plans being severely curtailed by pandemic restrictions. Many people are now choosing to dust off their travelling shoes and venture abroad again.
However, while South Africans might be excited about their upcoming travels, it is important for them to remember to have travel insurance on their checklist of necessities before going away, Karen Rimmer, head: of distribution at PSG Insure, says.
“When the travel bug bites, whether you are travelling locally or internationally, it may be easy to forget that travelling comes with its fair share of unforeseen eventualities that may prove costly if you are not adequately prepared.”
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Why you need travel insurance
Travel insurance helps you mitigate the risks around travelling, such as loss or theft of your luggage, flight or trip cancellation, medical costs, death and disability and personal liability. Rimmer says you have to take out travel insurance before embarking on a journey.
The pandemic highlighted the importance of travel insurance and there are some important aspects that travellers should be aware of, as cover is not available in all cases. While some banks provide complimentary travel cover when you buy airline tickets using a credit card, these policies usually only cover a specific scope of travel expense mainly focussed on limited medical cover and not baggage loss or cancellation costs.
Rimmer therefore recommends that travellers take out additional cover as a “top-up” to cover other eventualities and particularly sufficient medical cover.
“A comprehensive travel insurance policy will even cover the cost of airlifting should you need to be transported by helicopter to the nearest hospital”
This kind of cover is particularly important on trips to outlying areas or regions that are difficult to reach with a vehicle and includes hiking or skiing trips, as well as island visits and sea voyages.
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Beware of these exclusions
Rimmer warns that there are a few standard exclusions that people have to be aware of:
- costs incurred when a trip is cancelled due to an outbreak of Covid-19
- pregnant women from the first day of the 26th week of pregnancy as medical professionals may advise against travelling altogether, depending on the health of the woman
- medical claims, as a result of pre-existing illnesses of a vascular, cardiovascular and cerebrovascular nature are excluded for travellers older than 70.
These factors will influence your premium
The premium will be influenced by a number of factors, including:
- whether the travel period exceeds 32 days
- whether the destination is local or international
- whether the trip is for leisure or business, but if you travel for both, an appropriate ratio will be determined
- your health and whether you have any chronic conditions
- if you travel to participate in a competition or extreme sport event, such as the Olympics or the Tour de France, although itinerary activities, such as swimming and hiking will be included as a standard component of the policy.
“The exclusions, as well as the conditions of each policy, will vary greatly from case to case and therefore, it is important to talk to you travel adviser ahead of time and discuss aspects such as your itinerary, whether family members are accompanying you and any illnesses that you must consider,” says Rimmer.
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“There are a number of financial considerations that you have to keep in mind from an offshore-spend perspective, including individual allowances that South African residents have to comply with from an exchange control perspective,” Chantal Robertson, head of cross-border advice at FNB, says.
She has this advice for people who are travelling overseas:
- Ensure that you have travel insurance cover for medical emergencies, including the cost of medical treatment up to a certain limit, whether for a medical condition or an accident. It also covers trip disruptions, such as cancellation or curtailment of your trip due to any reason and covers booking cancellations by you or the tour company.
- Beware of withdrawal fees when drawing cash as you pay a withdrawal fee, such as €4 for withdrawals in Europe. A Global Account Debit card is a more secure means of paying and it is better to draw using this card at an international ATM only when necessary.
- Use your Global Account card for international card transactions as swiping with a local credit or debit card adds a 2% currency conversion rate.
- Leverage your banking benefits for benefits such as free travel insurance when you pay with your credit card, discounts on flights and car rental, a travel desk to help you book your holiday and access to airport lounges.
- Take note of your Single Discretionary Allowance (SDA) boundaries that covers all personal foreign payments and transfers, including travel, gifting and foreign investment. Remember that any purchase using your local debit or credit card is also allocated to the SDA. These limits are reported and controlled at an individual level, based on your identity number.
According to the current rules, SA resident individuals (18 years and older) are entitled to:
- R1 million annual Single Discretionary Allowance (SDA)
- R10 million annual Foreign Investment Allowance (FIA), subject to Tax Clearance.
Robertson says a simple way to manage these limits when travelling with your partner is to ensure that you use both allowances. If you use up your allowance or get close to it, consider to:
- use previously externalised funds, such as funds held in a Global Account or foreign account and the cards linked to these accounts can also be used without affecting your SDA
- use the R10m FIA by applying for tax clearance under the SARS FIA001 process but bear in mind that this process may take some time and a further consideration is that the amount applied for must be liquid.