Along with your passport, a good travel insurance policy is the one of the most essential things you need before jetting off on holiday. Travel insurance can cover you for emergencies you may run into while away from home – for example if you become sick or injured, if your luggage is lost or stolen, or if you need to cancel your trip because of a medical emergency.

But a staggering number of young Australian travellers do not know what is included in their travel insurance policy. Dean Van Es, CEO Fast Cover, says:

A survey commissioned by Fast Cover found that 17.2% of Australian travellers don’t understand what they are covered for when they buy travel insurance. 34.4% of these people are between 18 and 24 years old.”

Here we debunk some of the most common misconceptions about travel insurance and what you need to know to protect yourself while on holiday.

Myth 1: I Don’t Need Travel Insurance

Surprisingly up to 30% of travellers, the majority of whom are Gen Y, still travel without travel insurance.

Even if you are young, have never broken a bone, are very rarely sick, have had all your immunisations and plan to just relax on a beach overseas, you still need travel insurance.

Accidents and illness can happen to anyone, anywhere and at any time. There is no way to guarantee that it will not happen to you. What you can guarantee without travel insurance is that you will foot the cost of any unexpected expenses in an emergency.

The Australian Government will not pay for your medical expenses or medical evacuation while you are overseas. Depending on the nature of the emergency, the cost can range from a few hundred dollars to a six figure sum.

A single day in a hospital in the United States, for example, can cost between $1,400- $13,400 AUD. The cost of a medical evacuation from a cruise ship in Australian waters can reach between $10,000 and $20,000.

Travel insurance also covers you for a lot more than medical expenses. For example, you can purchase cover for lost luggage and unexpected trip cancellations, as well as emergency assistance.

Some travel insurance companies can provide you with international assistance over the phone:

Fast Cover gives travellers 24/7 access to the Allianz Global Assistance team. This team can guide you over the phone when you experience an emergency, wherever you are in the world” says Mr Van Es.

Myth 2: I’ll Get Travel Insurance The Day I Leave

While no one is going to make you buy travel insurance as soon as you book your trip, it may be in your best interests to do so once you have made some deposits.

Without travel insurance, if you need to cancel your trip unexpectedly, any deposits you have made towards your trip may be lost.

Paying a couple of hundred dollars for accommodation you will never stay in, a flight that you will never take or a cruise that you will miss is a learning experience that you can easily avoid.

Myth 3: My Pre-Existing Medical Condition Is Not Such A Big Deal

So perhaps you have been taking medication regularly for years with no problems, or you previously have had surgery.

You might not think this is significant when you buy your travel insurance, but it can be if your condition lands you in hospital or requires medical attention while you are overseas. Some travel insurers will cover a number of pre-existing medical conditions, however, if your condition is not covered by your policy then you will personally face any medical expenses.

It is always best to check your policy and to choose a travel insurance company that covers your underlying medical condition.

Myth 4: Travel Insurance Covers Me When I Party!!

Well, yes and no. While your travel insurance will cover you if you go to a party, it will not cover you if you do not act in a responsible way or if you participate in any illegal activity.

Most likely you will not be covered for medical expenses if you become sick or injure yourself when you have drunk an excessive amount of alcohol or taken illegal substances.

Myth 5: Everything I Do Overseas Is Covered

This is another unfortunate misconception.

If you hurt yourself by falling off an elephant, crashing a moped or toppling from a kayak, your travel insurance may not cover your medical expenses.

Your travel insurer will outline what activities you are covered for in their Product Disclosure Statement. If your activity is not listed it is best to assume that it is not covered and to find out if your travel insurer can cover you for that activity.

Adventurous activities such as bungee jumping and paragliding may be covered by paying an additional premium.

Myth 6: The Cheapest Policy Is The Best Policy

If only the cheapest option were always the best option.

It is worth remembering that in many cases paying more means getting more. While the cheapest travel policy will always be the most appealing, you should expect limitations on the level of cover you receive.

Compare a few policies and decide which option suits your trip best.

Myth 7: I Will Recieve A Refund If I Decide Not To Travel

Cancellation cover does not mean that you can recover the deposits you have put towards your holiday if you simply decide that you would rather not travel.

Cancellation cover only applies when an event prevents you from going on your trip.

For example, if you or a relative becomes sick or injured and you need to stay at home. In these situations you will be able to make a claim. If you decide that you would rather save money by cancelling your trip, you probably will not be able to make a successful claim.

Conclusion

Understand what is, and is not, covered by your travel insurance policy before your next adventure. When it comes to travel, a little bit of planning and research can go a long way.

What are some of your best (or worst) travel experiences? Has your travel insurance policy covered you? Tell us about it in the comments section below! 

With the high point of the 2015/16 Federal Budget wave breaking over small to medium sized enterprises, if you are a Gen Y entrepreneur, or small business owner, there has never been a better time to start paddling.

The Federal Budget influences the Australian economy in much the same way that oceanic currents affect the size and severity of an incoming swell. It sets the government’s political agenda for the year and, excluding global catastrophes, has the single biggest effect on the nation’s economy and the business environment. Unlike previous years, this year’s Budget has something different. The government announced the largest ‘small business package’ ever, coupled with changes to make crowdfunding more accessible for small businesses.

If you are an entrepreneur, small-business owner, or run a start-up, there is a strong undertow of benefits for you in this Budget.

Carving The Wave: Tax Rate Cuts For Small Businesses

The most notable budget item for small business is the tax rate cut of 1.5% (from 30% down to 28.5%), expected to take effect from 1 July 2015. Small businesses are classified as those with revenue of less than $2 million per annum – that’s around 780,000 Australian businesses.
Although it is less than ideal to have a tiered corporate tax system, which comes with its own complexities, it can generally be said that tax cuts to businesses are good for everyone. Income tax for individual taxpayers is automatically deducted by employers and, for the most part, this arrangement is well established and accepted. For companies, however, tax is a business cost and all costs ultimately flow on to the consumer.

For consumers, this reduction in tax for small businesses means that benefits will ultimately trickle on to you.

The Rip Tide: How Will The Small Business Rate Cut Help The Economy?

Small business owners will be encouraged to maintain, and continue developing, their businesses and new businesses will open. Many commentators agree that the focus on small business in this Budget is a move by the government to encourage Gen Y entrepreneurs to start new and innovative enterprises that will boost the economy.

This comes as increasing reports emerge of the great ‘brain drain’ where lack of venture capital investment is causing Australia to lose its start-up entrepreneurs to the lucrative shores of the US and Silicon Valley.

Big Wave Surfing: Accelerated Depreciation

Accelerated depreciation for small businesses was also announced in the Budget.

Keanu Reeves and Patrick Swayze in a scene from the 1991 motion picture “Point Break.” Photo by Richard Foreman, 20th Century Fox

This means that each and every new asset (for example, a car or kitchen) purchased by a small business owner, up to a value of $20,000, will be completely and immediately tax deductible from Budget night until 30 June 2017. If you own a small business, you can purchase as many individual items up to the value of $20,000 as you like.

This overtakes the current threshold of $1000, which can take years before a business can fully claim an asset for tax purposes.

Swimming Between The Flags: Employee Share Schemes for Start Ups

In small business, having access to the right resources can mean the difference between succeeding or wiping out.

Excitingly, the Budget addresses this by including changes to the Employee Share Schemes (ESS’s).

Typically, entrepreneurs and start-ups do not have a lot of capital floating around and may have negative cash flow. This means that they cannot afford the salaries commanded by the talented individuals needed to streamline the company and grow. The result is a negative feedback cycle that impedes small business development in the same way that a pro surfer’s progress would be crippled by not having a full sized surf board.

The operations of ESS’s have worked around this limitation by rewarding employees with shares in the company. This has had the two-fold effect of marrying employee risk and reward with that of the company. If the company succeeds, so does the employee.

Prior to a legislative change on 1 July 2009, individuals could defer payment of tax on their ESS’s until they sold their shares or the share gains were ‘realised’. Post 1 July 2009, employees had to pay tax on ESS’s upfront. So, individuals wishing to work for entrepreneurs and start-ups would not receive a wage or shares in a company that may go bust. The employee would also carry considerable personal risk while also being required to pay tax up front.

This Budget changes these measures so that employees who are issued with shares, or options, under ESS’s will generally be able to defer tax until they ‘realise’ the share/option value, rather than having to pay tax when they actually receive the shares.

Sudden Swells: Changes To Crowdfunding

Everyone loves the possible swell of financial support offered by crowdfunding platforms.

The Government has recognised these benefits and announced new incentives for start-ups, specifically around crowdfunding. $7.8 million has been allocated for the Australian Securities and Investments Commission (ASIC) to remove obstacles to crowd-sourced equity funding by working-up and implementing a new regulatory scheme regarding the raising and access to crowd sourced funds.

Currently in Australia, only ‘sophisticated’ or ‘professional’ investors can invest in start-ups through crowd funding arrangements.

The Government will still be keen to ensure that an appropriate level of investor protection is maintained. However, it is envisaged that the framework will facilitate easier conversion to a public company as well as simplifying reporting and disclosure requirements, all of which will reduce compliance costs and support investment.

Sink Or Swim: What Is The Low Down For Small Businesses And Entrepreneurs?

Lower compliance costs and obligations, lower taxes, accelerated depreciation, easier access to capital, and providing business greater flexibility with ESS’s are all more conducive to a more hospitable business environment for small businesses and start-ups.

All in all, for the small business and start-up sector in Australia this is a very good legislative package.

Think we’ve missed anything? Let us know what ways the Federal Budget will benefit your business in the comments section below!

Further Information

For more information on the Federal Budget and how it impacts your business visit:
Budget 2015 website.