With any insurance policy that includes some type of life insurance coverage, you will likely need to name a beneficiary to receive death benefits in case of your sudden demise. Many travel insurance plans include such coverage. These are the different types of travel insurance plans:

• Travel Medical Insurance: Primarily designed to cover post departure benefits such as getting sick or injured while in a foreign country.
• Trip Cancellation Insurance: Provides the coverage for non-refundable prepaid trip costs in case you can't travel due to covered reasons. Also, provides multiple benefits after you have departed on your trip.

What is Beneficiary in Travel Insurance?

When completing the application for travel insurance, many applications ask to specify a beneficiary. Many people are confused by this question being asked for travel insurance as they are accustomed to naming a beneficiary only for life insurance.

Most travel insurance plans provide the coverage for Accidental Death & Dismemberment (AD&D). In cases where the insured dies in an accident while on a trip, the named beneficiary is who will receive the proceeds of the lump sum death benefit for the specified accidental death amount. It is important to note that the death benefit amount is payable only in case of an accidental death, as per the AD&D coverage specified in the certificate wording. If the persons death is due to sickness or other natural causes, there is no benefit.

The AD&D benefit amount is not the same as the medical maximum. Therefore, if someone has purchased a travel medical insurance that provides $500,000 for medical treatment and $25,000 in AD&D, and the insured dies in an accident, the insurance company would pay $25,000, not $500,000, as the later amount is meant for medical treatment and is not a death benefit.

Who Should Be Named as Beneficiary?

When deciding who to name as the beneficiary to receive the death benefit in case of an accidental death, you should consider who would be responsible for handling any necessary arrangements after your passing. In best practice, you shouldn't name a person that is traveling with you, but select another trusted person to handle such affairs.

• If you are buying travel insurance for your parents, you can write your name.
• If you are buying it for your in-laws, you can write your spouse's name.
• If you are buying for yourself, you could write your parent's or adult child's name.

Travel insurance applications typically provide only one field for writing a beneficiary's name, some plans may also ask for the relationship you have with them.

You won't be able to specify complicated instructions such as a primary beneficiary, secondary beneficiary, and division of the money in different percentages amongst your children, siblings, parents, spouse or any other people. If you would really like that, you should simply write ‘Estate' in the beneficiary name field and then consult an estate planning attorney to have your will prepared, in which can included specifics in as much detail you like.

You might be tempted to write the name of the person traveling with you as the beneficiary because they are your spouse. However, as previously mentioned, it is advisable to name someone other than your traveling companion in case both of them were to pass away in a common accident. If you don't have an adult person that you would like to name as the beneficiary or you would like to name minor child as the beneficiary, you should consider establishing a trust first and naming that trust as the beneficiary. When the child is an adult, they will get the proceeds according to the terms of the trust.

No Beneficiary Name

Even though some travel insurance plans provide the AD&D benefit, they may not include a field to specify the beneficiary.

In such cases, who the funds go to may depend upon the laws of your country; it could go to the next of kin, directly to your estate, or to someone/something else. Before the funds are distributed, it is possible that it may need to go through the probate process. In many countries, including the U.S., the proceeds will typically go to your estate, and then will be distributed just like the rest of your assets would be distributed.

Collecting the Benefit

Travel insurance companies typically do not collect the contact details of the beneficiary. Therefore, they don't have any easy way to contact them. Before you or the insured person you purchased coverage for takes their trip, be sure that the insurance details are provided to the named beneficiary so that in case of the insured person's death, the beneficiary would know to contact the insurance company to collect the benefit.