Free travel insurance is one of the perks of owning a credit card, reports Patricia Howard.

Premium credit cards, which offer full medical travel insurance, now number more than 2 million cards in Australia, while a further 9 million "ordinary" credit cards on issue provide some level of travel insurance.

"For Australians who regularly travel overseas, 'free' travel insurance as offered on their credit card is a significant and valuable enhancement to that card," says Mike Ebstein, a director of MWE Consulting, a specialist company providing advice on card-based payment products.

According to Ebstein, frequent travellers ask for details about the insurance package being offered on the card before they will consider taking it out.

"They can readily see that the travel insurance options being offered to them will save them money compared to obtaining over-the-counter travel insurance and that these savings will more than pay for the annual fees charged on the cards themselves," he says.

Some banks may be cutting back on insurance benefits, but others are increasingly relying on the value of these benefits to win new customers.

This is particularly the case with premium card products - the high-end gold or platinum cards that are often offered to high net worth individuals as part of an overall banking product (see table).

But as with most insurance products, there are conditions attached. These vary from one card provider to the next.

To be eligible for the cover you must have a residential address in Australia and your travel must be limited to a few months at a time.

Insurance will usually be provided to the individual cardholder and will cover any immediate family if they are travelling together, if their travel itinerary is identical, or, in some cases, if it is very similar.

To qualify for the insurance, cardholders need to either purchase the return airfare on their credit card or spend a certain dollar amount while overseas.

"The banks can't afford to offer an inferior product to their valued gold card customers," says Ray Bowker, the managing director of the insurance broking group Mackellar Robinson Australia. "If the insurance didn't provide adequate cover, then the banks would be inundated with complaints from the very customers they are trying to attract."

Most industry analysts, however, agree that many cardholders are either unaware or have forgotten that they have the benefits as part of the credit card entitlements.

Too often, the details of this type of insurance are lost in the fine print.

If you are planning to travel overseas, you should find out the details of the benefits you may already have in place.

"Just as with any insurance you take out, consumers should carefully read all the details attached to the insurance provided via their credit cards," says Ebstein.

"This is particularly so if you have a pre-existing medical condition, as it is unlikely that the insurance will cover any existing medical problems you may have.

"You should also make sure you have your insurer's emergency contact number with you while you are travelling, so if something does go wrong you can contact the insurer as soon as you are able, to make sure you are covered in the way you think you are."

Importantly, most insurance provided by way of your credit card will still provide cancellation insurance should the travel provider go out of business between the time you pay for your travel and your departure.

Since the collapse of Ansett Airlines and some other smaller operators, more and more insurance providers have moved to withdraw this type of cover from their over-the-counter insurance products.

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