Rushing to catch a plane, you pass a come-on for flight insurance. You flash back to recent airplane crashes and wonder, “Should I bite?”
If you are insurance-savvy, you already have life insurance that will result in payment to your survivors. If you are on a business trip, you may be covered by your company’s policy.
Or if, like the vast majority of travelers, you charged your ticket on a major credit card, chances are high that the card provides automatic coverage.
Even if you aren’t otherwise covered, paying extra for flight insurance doesn’t make sense, advises Joseph Belth, professor emeritus of insurance at the Indiana University and long-time critic of the industry.
“A person should buy life insurance that will pay out no matter what his cause of death,” Belth said. Flight insurance might give a “white knuckle flyer” that extra measure of confidence, “but you could get the same feeling out of drinking some booze on the plane.”
The risk also makes the purchase questionable. Chances of dying in an airline crash are about one in 3 million.
But people continue to buy the policies.
For some, it is part routine. Older travelers are accustomed to buying it. Couples flying together purchase it for the benefit of their children. Parents buy it for flying dependents.
“I buy it every time I fly,” said Donna Hahn, a 39-year-old Seattle hospital technician and mother of two. She never charges the tickets for her annual vacation flights, and never books them through a travel agency. And although she has a life insurance policy, she buys $150,000 of flight insurance, which costs about $40.
“The possibility of a crash - that’s a reality,” Hahn said. “It can happen any time, for any reason.”
Public interest in insurance typically heightens after a big crash. Mutual of Omaha has seen a 5 percent increase in sales since the ValuJet crash on May 11 in the Florida Everglades and TWA flight 800 exploded July 17 off of Long Island, said Holly Richmond, an executive at a subsidiary that handles policies sold at airports.
Inquiries by MasterCard cardholders have gone up 15 percent to 20 percent, while American Express Corp. has had a 5 percent increase, said spokesmen at those companies.
Flight insurance has evolved since its creation in the 1950’s, when travelers deposited 25 cents for every $1,000 of coverage into vending machines.
Airport sales were nearly destroyed as credit card issuers began automatically writing the policies for airline tickets purchased with plastic, and travel agents began selling it as part of a policy that covers lost luggage, trip cancellation, or illness while on the road.
But Mutual of Omaha, the leading provider of accidental death and dismemberment insurance at airports, says there is a small but lively market for the over-the-counter product.
Its Tele-Trip Co. subsidiary writes about 100,000 policies a year, at operations in 90 airports throughout the United States and an additional seven in Canada. Most are drop boxes or kiosks, but there are staffed counters at about a third of those locations, said Richmond, a vice president at Tele-Trip.
Competition from other sources has driven down the price of flight insurance. Tele-Trip sells $500,000 of coverage for $16.65; $200,000 for $6.65; and $100,000 for $3.75.
It is not as lucrative as some other insurance products, in part because of the high rental fees for airport space, Belth said, adding, “They do it for the advertising benefit.”
“You do see our Indian Head all over the place,” responds Joe Pittman, a Mutual of Omaha spokesman. But he says airport sales are more than an advertising gambit and turn a small profit for the company. He declined to provide details on the profit or the cost of airport space.
Far from treating it as a loss leader or a dinosaur, Mutual of Omaha is test marketing some electronic delivery systems of flight insurance.
Some think over-the-counter sale of flight insurance should be banned because it encourages sabotage, Belth said.
He remembers the Arthur Hailey novel and film “Airport,” in which a character buys vending machine insurance and then boards a plane with a bomb in his luggage, with the intent to blow himself up so his family can collect on the policy.
Older travelers might recall a real-life incident in 1955, in which John Gilbert Graham placed a bomb in his mother’s luggage on a flight from Denver, blowing up the plane and killing 44 people, in an attempt to collect on a $37,500 policy he had purchased shortly before takeoff. He was convicted of murder and executed in 1957.
Modern flyers, of course, board airplanes every day without a thought that they might never land. But for people who worry about it, Marty Salfen, a senior vice president at the International Airline Passengers Association, recommends flight insurance as cheap peace of mind.
xxxx PROPER STEPS WILL MAKE FILING A CLAIM EASIER People hope they or their beneficiaries will never have to collect on flight insurance. But a few steps can make it easier for your family on the off chance that they have to make a claim: If you purchase flight or travel insurance from the travel agency that books your trip, file a form that lists a beneficiary. Most travel agencies will know if there is a problem with your flight and will contact the beneficiary. Most credit card issuers automatically attach flight insurance to any airline ticket purchased with their card. If you charge airline tickets, find out if insurance is included. If it is, put written notice of the coverage in a safe place and tell someone where to find it if you are injured or die. Some credit card companies or insurers will contact your beneficiary, but many will not. All policies bought at airports ask the buyer to list a beneficiary. Purchases at a staffed counter are immediately entered into a computer, making it easy for the insurer to determine a covered loss and contact the listed beneficiary. Travelers should always inform their beneficiary or attorney when they purchase insurance. A beneficiary can call the insurance company and request a claim form. The claims process should be concluded in a few weeks. - Associated Press