A Travel Insurance Skeptic Changes Her Mind
Getting older and taking frequent international trips have now convinced one expert that these policies may be worthwhile. Here's why.
I used to scoff at the notion of travel insurance, never even considering buying a policy that would reimburse my costs if bad weather or an illness caused me to cancel a trip.
I figured my chances of needing to file a claim were low and that any payback from the insurance would be lousy. As a longtime consumer reporter, I’d often heard complaints from travelers saying they were unable to collect because their policies contained so many loopholes.
What Changed My Mind
But now that I’ve gotten older, I’m having second thoughts about travel insurance, especially for expensive excursions, requiring lots of upfront cash, to countries not known for their medical care. (My new thinking has nothing to do with the Asiana plane crash; I'm still opposed to buying flight insurance because flying is generally extraordinarily safe.) If you’re over 50 and a globetrotter, I think you might want to buy some types of travel coverage before your next trip, too.
(MORE: Take Safety Precautions When Traveling Abroad)
The reason for my change of heart is simple: Small injuries and ailments can turn into big problems at my age, prompting not just cancellations of high-priced vacations but also an abrupt halt to a trip in progress if I get sick or injured.
Fortunately, I’ve yet to experience either scenario. But it's happened to friends in their 60s. In one case, a relatively simple back surgery turned into a staph infection that forced my neighbor and his wife to drop out of a long-planned, luxurious African safari with friends and family.
Foreign Medical Woes Cost Thousands
Then there’s the sad tale of a pal who was injured traveling in Laos and hospitalized in Hanoi, forcing him and his wife to miss their flight home. When doctors gave him the go-ahead to leave, they said he needed to fly business class to keep his legs elevated, costing the couple thousands of dollars more for tickets home.
It’s stories like these that prompted my husband and me to buy a limited version of travel insurance for two recent foreign trips. (Thankfully, we never had to file a claim.) Travel insurance comes in many varieties, from comprehensive coverage for an assortment of possible problems to narrow policies, like ones that only reimburse medical evacuation costs.
When Travel Insurance Makes Sense
Many consumer advocates, however, remain wary about travel insurance. "Generally," said J. Robert Hunter, director of insurance for the Consumer Federation of America, “I don’t think it’s a good financial deal for the vast majority of people.”
Still, Hunter told me, there are certain situations where travelers may want to consider the coverage. “If it’s the trip of a lifetime, you’ve put money away for decades and you’re worried you might get sick or there's a history of ailments, you may want to buy it,” he said. “Or if you’re traveling into strange places with poor health care and you think you might get sick, you might want to consider medical-evacuation insurance.”
(MORE: 6 Money-Saving Travel Secrets)
In other words, buying travel insurance, like purchasing most types of coverage, comes down to probabilities. “The rugged, healthy, unattached and gung-ho traveler will probably forgo trip cancellation or interruption coverage," travel guru Rick Steves notes on his website, Europe Through the Back Door. "I have skipped it many times and my number has yet to come up. But if you're paying out a lot of upfront money for an organized tour (which is expensive to cancel), if you have questionable health or if you have a loved one at home in poor health, it's probably a good idea to get this coverage.”
But what kind of coverage?
That’s an important question since there is such a wide range of policies and premiums for the most comprehensive policies that can amount to 4 to 8 percent of a trip's cost.
6 Types of Travel Coverage
Here’s a rundown of six forms of travel coverage and advice on how to buy a policy:
Trip cancellation/delay/interruption insurance is the most comprehensive and most expensive. If you or a family member becomes ill or dies before traveling, this coverage reimburses the prepaid expenses. If the problem occurs during the trip, the insurance provides reimbursement for services paid for but not yet received. The broadest version of this policy also includes medical insurance and evacuation coverage.
(MORE: Your Next Vacation May Include a Knee Replacement)
Medical insurance is a less expensive alternative for travelers who just want to be sure their medical expenses will be covered if they get sick or hurt on a trip. Premiums are based on your age, destination and the length of your stay. A 50-year-old traveling for two weeks might pay $36 to $56 for $50,000 in medical coverage; a 65-year-old might be charged around $60. An annual policy might go for about $200 a year.
You’re unlikely to need medical insurance if you’re traveling in the United States and own a health policy, since health insurers typically cover costs domestically even if you’re not near your hometown. (Check with your insurer to be sure, though.)
Most health insurers, however, don’t pay for health care costs incurred overseas. That includes Medicare – unless you’ve purchased the top-of-the line supplemental coverage.
Medical evacuation coverage is often included in a medical insurance policy, but you can buy it separately if that’s the only protection you want. This type of travel insurance can be important if you’ll be vacationing in an area not known for quality health care. As Kiplinger’s Jessica Anderson recently noted, medical evacuation for an airlift home can cost more than $100,000.
You can purchase medical evacuation coverage on a per-trip basis (starting at around $45) or for an annual fee of roughly $250.
Baggage insurance or personal-effects coverage is generally included in most comprehensive policies, providing up to $500 to $2,500 in reimbursement if your belongings are lost, stolen or damaged.
Cancellation waivers, often offered by cruise and tour operators, generally run about $40 to $60. But many won’t kick in if you drop out at the last minute — say, two days before a trip – which is often when travelers conclude they’re too sick to travel. Also, these waivers won’t refund money you’ve already paid. They simply waive any cancellation penalties and may cover any unpaid money with a voucher for a future trip. And if the tour operator that sold the waiver goes out of business, you’re sunk.
Flight insurance, which plays on travelers’ fear of crashes, costs about $20 for $250,000 in coverage. It used to be sold at kiosks near airport gates, but most of those kiosks have disappeared. That’s probably a good thing, since many consumer advocates call this coverage a rip-off because – despite the recent tragic San Francisco crash – flying is very safe so there's little need to buy this coverage.
8 Tips From Travel Insurance Experts
And now, eight travel insurance buying tips from the pros:
1. Compare policy terms and prices carefully. The websites InsureMyTrip, Squaremouth and TripInsuranceStore are good starting points because they’ll give you quotes from dozens of firms.
2. Purchase coverage from a well-known company. “Avoid buying insurance from a no-name company you found online,” Rick Steves says. Highly regarded companies include Travelguard, TravelEx, Global Alert, Travel Safe and, for medical evacuation insurance, Medjet Assist.
3. Find out if you’re already covered. Your homeowner’s or renter’s insurance may protect your electronic equipment and lost baggage; some credit cards also reimburse you for lost or delayed luggage.
You may also receive compensation from your airline if it loses your luggage, up to $3,000 per passenger for a domestic flight; $1,500 for an international journey. But airlines base their reimbursement on what the items were worth at the time, not what it costs to buy new ones, and they generally exclude jewelry and furs.
The credit card you used to buy your ticket or tour may pay up if your airline or tour operator goes bankrupt before your trip.
4. Read the fine print before you buy. This is especially true for trip cancellation policies. Some may cover pre-existing health conditions or vacations scrapped due to a layoff, some won’t. One insurer may reimburse for a four-hour flight delay; another may require you to be inconvenienced for 24 hours. Many cover out-of-pocket expenses if your cruise or tour operator goes out of business, but others will not. They may also exclude companies in bankruptcy or in the midst of labor disputes.
Some, but not all, travel insurers protect you against events beyond your control, like a natural disaster or terrorist attack. One company’s definition of a natural disaster may differ from another’s, though — or yours, for that matter. (A hurricane may have destroyed much of the beach you plan to visit, but if your hotel is still open, the insurer might decide this natural disaster doesn't merit a payout.)
Read the densely worded policy, not just the brochure or online synopsis, to make sure you know what’s covered. When in doubt, ask the insurer’s representative to point to the specific provision in the policy to confirm his or her answer.
5. Consider buying a floater. Some baggage insurance policies exclude expensive electronic equipment, jewelry or sporting gear, even if they’re lost by an airline. If your homeowner’s or renters policy doesn’t include these items when you’re traveling and you want the coverage, you might want to purchase an inexpensive “floater” (insurance jargon for a policy rider) from that insurer rather than buy travel insurance, says the Insurance Information Institute.
6. Know what’s required to make a claim. Then keep all the paperwork you may need, including trip receipts, doctor’s bills, proof from an airline about baggage or flight delays and receipts for any necessities you bought because your luggage was delayed or lost.
7. Beware of policies sold directly by airlines and cruise lines. They typically offer less coverage at higher costs than those offered by third-party firms. That’s probably because the carriers and cruise companies receive big commissions, Hunter says.
8. If you go overseas often, consider buying an annual travel insurance policy. It’s more cost-effective than buying a separate one for each trip. Safe travels!