Buying flight insurance may not be necessary

January 27, 1995|By Andrew Leckey

It's a grisly but consistent statistic: For two weeks after an airline crash, nationwide sales of flight insurance rise 10 percent to 15 percent as nervous travelers seek greater protection.

That, despite the fact that the odds of dying in a plane crash are quite slender -- estimated at 1 in 4.6 million. Virtually the same odds as winning the lottery.

Flight insurance is a controversial special-risk life insurance, usually bought at the airport or from a travel agent, that pays benefits for accidental death and dismemberment in a crash. Those who favor it contend it's a cheap way to meet a specialized need.

Critics maintain it makes more sense to simply buy conventional life insurance covering all potential needs. Furthermore, you may already receive flight insurance from the credit card issuer with whom you charged your airline ticket.

"We consider flight insurance an emotional purchase that gives travelers extra peace of mind," explained Jenny Van Soelen, spokeswoman for Mutual of Omaha Cos., the largest seller of flight insurance at airports through its Tele-Trip Co.

"It is primary coverage, meaning we pay first before any other type of life insurance kicks in," she said.

Since anyone can purchase it, she added, individuals with health problems that exclude them from other life insurance find it's their only coverage.

Critics aren't impressed.

"The consumer must ask why he wants insurance for anything that happens in a plane crash versus a general life policy that covers a variety of circumstances," said Con Hitchcock, a litigator with the Public Citizen consumer advocacy group. "Flight insurance is overpriced when compared to life insurance purchased through regular channels."

Companies underwriting flight policies through a variety of policy names and outlets include Mutual of Omaha, Continental Corp., BCS Insurance Co., Travelers Corp. and Monument General Insurance Cos.

A Mutual of Omaha policy sold at the airport costs $16.65 for $500,000 in coverage ranging from full death benefit to partial payment for loss of limb or sight. The company's $5 policy provides $150,000 coverage. Meanwhile, Travel Guard International policies, underwritten by Continental and sold through travel agents, cost $10 for $200,000 worth of coverage and $6 for $100,000.

Since prices vary, consumers intent on buying flight insurance should shop around.

"Some people feel they don't have adequate existing coverage and find it convenient to just fill out a short application form for that specific trip," said Diane Coffey, spokeswoman for the American Council of Life Insurance.

Travelers often purchase flight insurance from their travel agent or receive it free. "A lot of travel agents automatically give flight insurance as a service to each client who is flying," noted Steve Loucks, spokesman for the American Society of Travel Agents.

Keep in mind that flight insurance is also a membership perk of some organizations. In addition, American Express and many bank card issuers give it automatically when you charge an airline ticket.

"Our members receive worldwide personal accident insurance that covers scheduled flights, public transportation and trip accidents," said Jorge Rincon, director of membership services for the International Airline Passengers Association.

His association's $99 annual membership offers a broad range of travel services, including $100,000 coverage. Its $425 membership features $1 million worth of coverage.

"We offer a base coverage of $100,000 in flight insurance on our personal, Gold and Optima cards and $500,000 on Platinum," added Larry Sharnak, vice president with American Express Travel Related Co. Inc.

American Express also offers extended coverage you sign up for in advance. When you take a trip, it automatically bills you.

"Each institution issuing Visa Gold Cards must give the cardholder at least $150,000 in insurance coverage for airline, train, ship and bus," said Stephanie Caracristi, spokeswoman for Visa International.

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