Which statement correctly describes a travel accident insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A travel accident policy is a limited-benefit accident policy: coverage attaches only to accidental injuries, and typically accidental death and dismemberment, sustained during the covered trip. It does not cover sickness, which is why a traveler who becomes ill mid-trip is not paid under the accident benefit. Because the coverage is tied to travel and to accident as the cause, premiums are low and benefits are fixed in the contract rather than tied to the size of medical bills. Travel accident is one of the named limited policies in the general concepts of medical and disability insurance (AH-II.3), and the accident-only scope is the trait examiners test.
Why the other options are wrong
- B) Travel accident policies are accident-only limited policies and are not comprehensive medical expense plans. They pay fixed benefits for accidental injuries sustained while traveling and do not cover the full range of care or all causes, including sickness, that a comprehensive major medical plan would cover.
- C) Replacing lost income is the function of disability income coverage, which is a separate product. A travel accident policy pays stated accident benefits, such as fixed amounts for accidental death or dismemberment, and does not serve as income replacement for the trip.
- D) The policy pays stated, limited benefits that are fixed in the contract, such as a set amount for the loss of life or a limb. It does not reimburse the full amount of actual medical bills, and its benefit amounts are capped regardless of the size of the bill.
Memory hook
Travel accident = accident while traveling; a flu on the trip gets nothing.