Travel Insurance – Don’t Leave Home Without It!
Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowTravel is picking up again as those postponed trips from 2020 are finally happening. One thing in the back of many people’s mind is – what if something happens and we can’t go? When packing the sunscreen, beach towels, and passports, don’t overlook the perks of buying travel insurance! Coming from someone who has filed a few claims (Yes, I’m looking at you, Hurricane Irma, and you, giant 40-leg centipede in Jamaica) the financial benefit can definitely be worth it!
The Fundamentals
Travel insurance protects you from certain types of financial loss incurred while traveling. It can be as simple as ensuring you are refunded for canceled flights or as comprehensive as paying for a medical evacuation off a mountain. Each policy provides different types of coverage so consider your risks when looking for a policy for your trip.
“Trip Cancellation” coverage reimburses you if you have to cancel a trip due to a predefined, reason, such as:
- Illness of you or a family member
- Severe weather impacting your trip
- A terrorist attack
Trip Cancellation addresses some unexpected events, but it won’t cover all possible situations. Want peace of mind in knowing that you have the option to decide not to go? Purchase “Cancel for Any Reason” coverage. This will increase the premium by about 40%, but the flexibility it provides may be worth it! This coverage generally must be purchased within a few weeks after booking your trip.
Similar, yet different, is “Trip Interruption” insurance. Unused expenses and costs of additional transportation can be covered if you have to return home sooner than expected. For example, when I had to evacuate Key West due to Hurricane Irma, the cab to Miami, rental car to Atlanta, hotel stay in Atlanta, and even the flights back to Indianapolis were all covered through Trip Interruption insurance.
Medical Emergencies
When traveling outside the United States, some health insurance plans (including Medicare) won’t extend coverage to overseas. Good news! Most travel insurance plans have some type of medical coverage.
“Emergency Medical Coverage” will reimburse you for medical expenses incurred on your trip. During a trip to Jamaica, we had an unplanned and unfortunate encounter with a 40-leg centipede that ended up in a visit to a local doctor and treatment. After the initial shock of the experience wore off, we kept track of the receipts and turned them into our travel insurance provider. Within a few days, we had our reimbursement check.
“Medical Evacuation” coverage will transport you to the nearest hospital or potentially bring you back to your home country depending on the type of coverage provided. Review this part of the policy carefully! You don’t want to find out after taking a fall that your insurance is only obligated to get you to a local hospital and not all the way home.
As with every other aspect of our lives, COVID-19 has also impacted the travel insurance market. Some policies are now offering “epidemic” coverage that will provide various levels of protection if you are impacted by COVID-19 or another global pandemic. Again, read the policy so you know exactly what is covered and, more importantly, what isn’t covered.
Where Do I Purchase It?
When booking your trip, you will likely be presented with an option to purchase insurance through the booking agency. In some situations, these policies will be adequate. However, if you want to customize the policy at all, this may not be the best solution.
Paying for your trip with a credit card? Contact your credit card company and ask if they provide travel insurance to their customers. These policies aren’t customizable either, but are typically free perks that you may have as a card holder.
Travel insurance comparison websites allow you to filter for the specific coverage you are looking for. Traveling to the Caribbean during hurricane season? Seek out a policy that specifically addresses hurricanes. Don’t delay though! Hurricane coverage generally doesn’t apply after a hurricane is named. Planning on a more “risky” excursion? Filter for policies that will provide coverage for your planned activities. Some policies won’t cover medical expenses associated with activities like bungee jumping or parasailing unless they are explicitly named. Using a comparison website may take a little extra time, but with the ability to customize means you can get coverage that fits your needs.
Costs will vary based on the level of protection provided, with premiums usually ranging between 4% and 10% of the cost of your trip.
The Long and Short of It
It’s bad enough if you have to postpone or cancel a vacation. Don’t take a financial hit as well. Travel insurance is something you hope you’ll never need, but you will certainly be grateful to have it if you do.
Sarah Mahaffa, CFP, is a Senior Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Sarah at smahaffa@bedelfinancial.com.