When to buy travel insurance and when to skip it

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

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

Lori Park says she never goes on vacation without insurance. “It’s something I find important whenever I travel,” she notes.

Do you need travel insurance?

There are five broad types of travel insurance: flight policies, which pay out if your plane crashes; baggage insurance to cover damaged, lost or stolen baggage; interruption/cancellation insurance to pay you for trips that don’t happen; medical insurance for doctor visits and hospital stays; and evacuation coverage that pays to move you to an appropriate medical facility. You can buy them individually or in bundles.

Travel experts say insurance can help people avoid potentially catastrophic expenses, as happened with the parks. But it is not necessary for everyone.

“Insurance adds about 13 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 domestically, or if the plane ticket is refundable or usable in the future and the hotel has a cancellation before the trip – even if it’s 48 hours before – then there’s no real reason for insurance.”

You don’t need insurance that covers accommodation and airfare if you plan to stay with friends and buy your ticket with frequent flyer points redeemed. You would only insure against events that would expose you to major financial loss (for example, developing a serious illness requiring hospitalization or missing a cruise due to a flight delay).

Read also: 12 ways to adjust your holiday for inflation

How to shop for travel insurance

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

Insurance companies determine the price of a policy by looking at your destination, modes of transportation (airline or charter? rental car or taxi?) accommodation (cruise ship? resort? Airbnb?) activities (swimming with sharks? skydiving?) and local weather (hurricane season in the Caribbean?).

They then look at age and pre-existing conditions. Insurance will be more expensive for an 80-year-old than a 70-year-old. People in their 70s taking an extended cruise overseas, even fully vaccinated, have seen quotes of $10,000. That’s why it’s important to shop around and compare policies, benefits and costs.

What coverage do you want or need? Since COVID is still active, you may want to cover yourself and your group for the disease. Choose a policy that provides primary medical coverage rather than secondary coverage; the latter requires you to first file claims with your regular health insurer and later pursue the travel insurance company for any remaining balance due.

The cost of travel insurance will depend on how much medical and evacuation cover you buy. Higher dollar limits are better, but more expensive. You might want to consider ‘cancellation for any reason’ cover, which, as the name suggests, will reimburse you for 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 expenses, especially during hurricane season,” says Dan Drennan, director of sales and marketing for the Travel Insurance Center in Omaha, Nebraska. “If you have valid trip cancellation-interruption coverage that was purchased before a storm was named, then 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 you should consider travel insurance. Janet Jones Carraker of Island Jack’s Travel in Dexter, Missouri, says she knows one traveler who took his entire family, husband, grown children and grandchildren on a trip to Ireland. They chose not to purchase 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 Karaker. “There are people who can afford it, but most can’t.”

It’s not just about how much you stand to lose if you can’t or don’t take that trip; That’s how much a replacement vacation will cost you? How much more expensive will transportation, accommodations, and activities be next year or the year after? And when will you get a chance to take that vacation, especially a bucket-list trip that requires coordinating vacation days for multiple family members?

See also: Don’t be fooled by these myths about travel insurance and what it covers

How to save money on travel insurance

Just as coverage can vary from one insurer to another, so can the price. To save money on insurance, start by checking your credit card to see if it offers coverage. If you decide to pay for insurance, buy as little as you need—if your luggage is valued at $2,500, don’t insure it for $15,000. If you’re paying for a cruise, resort, or flights with redeemable points, you don’t need to insure them at all.

For the most part, Medicare does not provide coverage outside the United States. If you have a private Medicare Advantage or Medicare Supplemental policy, see if it provides such coverage. If not, you’ll need travel insurance that will reimburse 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 the trip, will the insurer allow you to pay for 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, if you have diabetes, for example, it is only considered “existing” if your medication is changed within two weeks or more of your departure.

Connected: Why pay for travel insurance? You may already be covered.

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

Judy Colbert, author of 36 books, writes about travel and the travel business.

This article is reprinted with permission from NextAvenue.org© 2022 Twin Cities Public Television, Inc. All rights reserved.

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