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Travel insurance is one of those categories of insurance that perplexes a lot of people. Is it a waste of money? Do you need it or not? And what does it cover anyway?
In this article, we’ll answer those questions for you. Plus, you’ll discover 4 facts about travel insurance that just might surprise you.
The world of travel has changed a lot over the past few years, reflecting some of the global tensions and challenges that have become an unfortunate reality. However, with a few commonsense tips, you can begin to prepare yourself for whatever risks may lay ahead and focus your attention on having a safe and enjoyable trip.
Travel insurance is for when things go awry
You’ve packed your bags, confirmed your reservations and asked your neighbor to keep on eye on the house while you’re gone. While you may feel confident you’ve done everything possible to have a great vacation or business trip, you might be overlooking some unforeseen circumstances that could ruin your travel experience.
And this is where travel insurance comes into play. It covers a range of financial losses you might sustain during your travels. It covers a potpourri of untimely events—some small annoyances all the way to life-threatening calamities—that could befall you during your journey.
These are the kinds of things a policy might cover:
- Emergency medical coverage
- Coverage for recurrence of pre-existing medical condition
- Emergency medical evacuation
- Around-the-clock emergency assistance
- Trip interruption
- Trip cancellation
- Special event cancellation
- Lost, damaged, or delayed baggage
- Terrorism coverage
- Kidnap and ransom coverage
- Accidental death/flight coverage
- Adventure sports coverage
- Identity theft coverage
Not all policies cover everything on the above list. Some policies only cover a few of the above items, while others are more comprehensive or offer you the opportunity to pick and choose which items you want covered.
Travel Insurance Fact #1: You may already be covered for certain things.
In some cases, you could have travel insurance available to your through your homeowners, renters, or health insurance policies. It’s an excellent idea to familiarize yourself with what your various policies cover.
Pay special attention to limitations and exclusions. If you find your policies have significant limitations or exclusions you’d like covered, you might want to consider a supplemental travel insurance policy that only covers these items.
Travel Insurance Fact #2: You may be offered travel insurance when you purchase your tickets or vacation package.
Again, this is where it’s good to know what coverage you already have through your other policies. You may feel pressured into buying travel insurance when you purchase your airline tickets or finalize your vacation arrangements.
For many travel-related companies, selling customers on travel insurance is a profitable “upsell.” They already have you on the phone or you’ve already entered your credit card information online. With a quick “yes” or click of a button, you could add travel insurance onto your bill.
This may or may not be the best insurance to meet your needs. A little bit of research beforehand could reveal better options for you. And if you’ve already done your homework and know you’re covered by your other policies, you could save yourself the expense of duplicate insurance.
Travel Insurance Fact #3: Your domestic health insurance may not cover you during international travel.
Many U.S. health insurance plans only provide coverage for medical expenses while you’re in the country. Or, they may provide very limited coverage for international travel. It’s a mistake to assume your medical insurance will be honored in a foreign country or that your insurance carrier will reimburse you for medical expenses you have while traveling abroad.
Before you leave on your trip, review your health plan benefits and contact your plan for detailed information. Find out specifically what your coverage will be in the event you get sick or injured.
Also, inquire if you’ll be covered for pre-existing conditions and how the company will pay for your medical expenses while you’re traveling. For example, will you need to pay upfront and then get reimbursed after the fact? Will your plan cover the cost of prescriptions?
If your health insurance doesn’t offer you coverage abroad (or if the coverage is limited), find out if they have a “gap” insurance plan that will give you coverage during the time you’re traveling. You can compare this coverage to plans offered by companies that specialize in travel insurance. A side-by-side comparison can help you find the best coverage at the best value to meet your needs.
Important Note: Some seniors assume Medicare will cover them while they travel abroad. However, this is not correct. Only under very rare circumstances will Medicare cover you for travel outside the United States. However, a Medicare supplemental policy (also known as Medigap) might cover you when you travel outside the U.S.
Travel Insurance Fact #4: You can compare travel insurance ratings to help you make a good decision.
Before purchasing travel insurance, you might want to check out the ratings of various insurance companies. Your goal should be to purchase from a highly rated company, one that has a track record of paying claims on time and of financial stability.
In addition to travel insurance ratings, you’ll also want to keep in mind other factors as you compare companies, such as:
- Benefits included in policy
So, is travel insurance worth the cost?
Well, like so many things in life, it depends.
Certainly, spending extra for adventure sports coverage might not make sense if you plan on spending your vacation relaxing by the pool with a margarita and a book. But if you plan an action-packed trip filled with paragliding, surfing, and cliff climbing, adventure sports coverage might be just what you need.
When determining if travel insurance is worth the cost, ask yourself questions related to your health and finances. Try to get as specific as possible, imagining worst case scenarios you might encounter while traveling.
For example, if your health insurance doesn’t cover you on international trips, would you feel comfortable knowing that if you suffer an illness or injury in a foreign country you would have to foot the bill yourself? You could even be responsible for arranging your emergency medical evacuation back to the United States. According to the Centers for Disease Control and Prevention (CDC), the cost of a medical evacuation could set you back more than $100,000.
The Bottom Line
Many experts say a good rule of thumb is to expect to pay about 4% to 8% of your trip value on travel insurance. For example, if you spend $3,500 on a vacation to Spain, expect to spend anywhere from $140 to $280 on travel insurance. Again, this may vary depending on what coverage your other insurance policies offer you and if you require customized coverage.
If you’re a frequent traveler, you might want to look for a policy that covers you for a longer period of time as opposed to insuring each individual trip. Some companies offer policies aimed at frequent travelers and you could get a significant discount with one of these policies.
The best way to decide if travel insurance is worth the money is to take time before your trip to consider what types of things you’d want covered based on your health, finances, lifestyle, and ability to cover the risks should you have an emergency.
Review your current policies to see if you already have coverage. If you identify “gaps” in your coverage that you would want covered, then begin researching various companies and policies to cover these gaps. You might find it’s far cheaper to buy travel insurance before your trip (which also gives you the added “peace of mind” benefit) than risk the consequences later on of going without coverage.
Have you purchased travel insurance in the past? What prompted you to make the decision? We’d love to hear your comments! Feel free to leave them in the section below.
Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.