When to buy travel insurance

When to buy travel insurance

This may help some vacationers avoid financial disaster, but protection isn’t necessarily a good value for everyone

Chicago-area resident Lori Park and her 80-year-old mother, Nancy Park, were on a cruise to Hawaii when her mother became ill. She spent five days in the ship’s hospital before being evacuated to Mexico and then flown back to the United States.

Two older adults wearing snorkeling gear in the ocean.  Next Avenue, Is Travel Insurance Worth It?
If you’re shopping for travel insurance, read the fine print and take notes so you can compare what’s offered, what’s not, and how much it will cost. | Credit: Getty

All of that medical care and transportation added up to thousands of dollars in unexpected expenses, but it was all covered by the $436 worth of travel insurance the two women had purchased before they left.

Lori Park says she never takes a vacation without insurance. “It’s something I find essential whenever I travel,” she notes.

“It’s something I consider essential whenever I travel.”

Do you need travel insurance?

There are five broad types of travel insurance: flight policies that pay out in the event of a plane crash; luggage insurance to cover damaged, lost or stolen luggage; interruption/cancellation insurance to cover trips that don’t take place; medical insurance for doctor visits and hospital stay; and evacuation coverage that pays to move you to an appropriate medical facility. You can buy them individually or in sets.

Travel experts say insurance can help people avoid potentially catastrophic costs, just like parks do. But not everyone needs it.

“Insurance adds about thirteen percent to the cost of a trip,” says Jay Smith, president of Sports Travel and Tours in Hatfield, Mass., which specializes in sports travel. “If someone is traveling locally, or if the airfare is refundable or future-proof, and the hotel is canceled before the trip, even if it’s 48 hours before the trip, then there’s no real reason for insurance.”

You don’t need insurance that covers lodging and airfare if you plan to stay with friends and buy a ticket with redeemable frequent flyer points. Insured only for events that would result in major financial loss (eg serious illness requiring hospitalization or missing a cruise due to a flight delay).

How to buy travel insurance

To find the right policy, you need to consider what type of cover you need and how much risk you can afford, then shop around for a low premium.

Insurance companies determine policy costs by looking at your destination, modes of transportation (scheduled airline or charter? rental car or taxis?), accommodations (cruise ship? resort? AirBnB?), activities (swim with sharks? skydiving?) and local weather conditions (hurricane season in the Caribbean?).

Then they look at age and pre-existing conditions. Insuring someone in their 80s will be more expensive than 70. People in their 70s and older going on an extended overseas cruise, even fully vaccinated, have seen quotes as high as $10,000. That’s why it’s important to shop around and compare policies, benefits and costs.

What coverage do you want or need? With COVID still active, you may want to protect yourself and your party from the disease. Choose a policy that provides primary medical coverage rather than secondary coverage; in the latter case, you must first file a claim with your regular health insurer and later contact the travel insurance company for the remaining debt.

The cost of travel insurance will depend on how much medical and evacuation cover you purchase. Higher dollar limits are better, but more expensive. You may want to consider “cancel for any reason” which, as the name suggests, will refund the cost of a trip you cancel for any reason, even if you just change your mind.

“It’s always a good idea to cover your prepaid, non-refundable travel costs, especially during hurricane season,” says Dan Drennen, director of sales and marketing for Travel Insurance Center in Omaha, Nebraska. “If you have valid trip cancellation and interruption coverage that was purchased before the storm was named, you can rest easy knowing that if a hurricane ruins your trip, it won’t wipe out your bank account.”

It doesn’t take a hurricane to illustrate why travel insurance is worth considering. Janet Jones Kereker of Iceland Jack Travels in Dexter, Missouri, says she knows one traveler who took her entire family, her husband, grown children and grandchildren, on a trip to Ireland. They chose not to buy insurance and while there, the woman’s husband died.

“There is no sorrow like necessity [pay] $100,000 to take care of her husband’s remains and send them home,” says Kerekere. “There are people who can afford it, but most can’t.”

“If you have valid trip cancellation and interruption coverage … you can rest easy knowing that if a hurricane does ruin your trip, it won’t wipe out your bank account.”

It’s not just how much you stand to lose if you can’t or can’t take that trip; how much vacation leave will pay you back How much more expensive will transportation, lodging, and activities be next year or the year after? And when will you be able to take that vacation, especially a trip to a list that requires you to coordinate vacation days for multiple family members?

How to save money on travel insurance

Just as coverage can vary from insurer to insurer, so too can the price. To save money on insurance, first check your credit card to see if it offers coverage. If you choose to pay for insurance, buy as little as you need—if your luggage is worth $2,500, don’t insure it for $15,000.

For the most part, Medicare does not provide coverage outside the United States. If you have a private Medicare Advantage or Medicare Supplemental policy, check to see if it provides such coverage. If not, you will need a travel insurance policy that will cover medical expenses abroad. If you travel often, consider an annual policy that covers all your trips.

If you pay for your holiday in installments before you travel, will your insurer allow you to pay for your insurance in comparable installments? You don’t want to pay the full cost of insurance if you’ve only put down a 10% deposit.

Define what a pre-existing condition is. Generally, for example, if you have diabetes, it is only considered “pre-existing” if your medication is changed within two weeks of departure.

The bottom line is that when shopping for travel insurance, you need to read the fine print and take extensive notes so you can compare what’s offered, what’s not, and how much it will cost.

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