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 The Brancatelli File

joe THE HIGH COST OF JUNK INSURANCE

BY JOE BRANCATELLI

January 1, 1990 -- Sales of specialized flight insurance increase for several weeks after a major airplane crash or terrorist incident. But the value of these policies is questionable; even the insurance industry calls the coverage junk insurance.

The standard policy sold by Mutual of Omaha at airport kiosks offers $300,000 of life insurance for a one-time premium ($6 at New York’s La Guardia Airport). But the coverage offered is, in practice, limited to the length of a single round-trip flight. Granted, a $6 premium purchased to cover a six-hour flight is not a lot of money, but it is equivalent to paying $8,760 a year in premiums for a traditional $300,000 life insurance policy.

Moreover, specialized flight insurance is probably unnecessary for most travelers because most standard life insurance policies cover accidental death. In addition, many travelers receive free flight insurance when they pay for plane tickets with a charge card: Diners Club members receive $350,000 in air travel coverage, and American Express Green and Gold cards provide $100,000. Many banks issuing Visa or MasterCards also give customers free flight insurance: Citibank, for example, provides $350,000 of coverage with its Preferred MasterCard, and Chase Manhattan, $350,000 with its Visa Gold card.

If your peace of mind demands you purchase additional flight insurance, consider more cost-effective yearly options. Mutual of Omaha sells a $200,000 policy covering injury or death on any “common carrier,” including airlines, for $50 in New York State. (Policy amounts and premiums may vary from state to state.) American Express Card members can buy between $250,000 and $1 million of coverage for an annual charge of $60-$225. Many travel agents sell comprehensive policies that include trip-delay and cancellation coverage, as well as reimbursement for lost baggage and the cost of medical emergencies.

This column originally appeared in Travel & Leisure magazine.

Copyright © 1983-2013 by Joe Brancatelli. All rights reserved.