Increasingly, banks and credit cards are offering a selection of free perks to try and get additional customers. There are all kinds of incentives, but the one I hear most about (for obvious reasons) is the free travel insurance. Although you can argue that I'm something of a biased source, working in the UK travel insurance industry myself, I have heard enough to realise that this ‘free' cover, while nice in principal is often not worth the paper it's printed upon!

The main problem with this ‘free' cover is that it usually isn't as exhaustive as the name would have you believe. Most of the policies offered by banks are what is known in the business as “travel accident insurance” which is not the same thing as travel insurance despite the similar names! Travel accident insurance covers you against having an accident as you travel, rather than on your travels. In short this means that the only period of time you're protected for is when you're on public transport to or from your holiday destination. Additionally illness would typically not be covered by this, as getting sick isn't an “accident”, thus limiting the usefulness of the freebie further. Given the rarity of air accidents, this is pretty pointless cover and nowhere near as extensive as a full UK travel insurance policy should be.

But what if your credit card offers fully fledged UK travel insurance and not the cut down accident version? Surely then it's a good deal, right? Maybe, but the usual caveats apply – there really is no such thing as a free lunch, and you should read the small print on the policy carefully, because you can be sure that this is a bare-bones policy covering the absolute minimum. Things to look out for especially include age restrictions (if you're over 55, your free cover may not protect you) and dangerous activities like skiing and winter sports which almost certainly won't be present. Then there's one of the main features of UK travel insurance: medical expenses. Most free travel insurance policies will cover your expenses up to £350,000 which sounds like plenty, but consider that a good deal of claims exceed this – especially in the USA. Look out for restrictions on cancellation cover as well, because these can be laughably restrictive in their permitted reasons for cancellation.

The bottom line is that there's really no reason to take any chances on something so important. There are many great quality cheap travel insurance packages which cover everything you will need at a price that you'll barely notice, compared to the cost of going abroad in the first place. If you get one of these, you can make sure that you're covered for skiing, sports, medical bills, cancellation and anything else that may go wrong, without getting any unpleasant surprises if you end up making a claim!

It isn't all useless though – your credit card is a great way to pay for your holiday, as it covers the purchase under the Consumer Credit Act in case the tour operator fails to honour their contract. Pay via credit card, buy some cheap travel insurance separately and you'll be completely ready to relax, unwind and enjoy your break!