Is Travel Insurance Worth It?
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KEY POINTS
Travel insurance can protect against trip cancellations, trip interruptions, missed connections, lost or delayed baggage, and medical emergencies
Specialty coverages can protect you while participating in adventure activities or extreme sports like mountaineering, bungee jumping, scuba diving, and more
Travel insurance can be vital for international travel as medical costs incurred internationally are not likely covered by your government sponsored health insurance plan
Cancel For Any Reason, and other coverages are available and worthy of your consideration
What is Travel Insurance?
Travel expenses can add up quickly, and much like insuring your home, car, health, and life, acquiring travel insurance can protect against unforeseen financial risks.
The insurance costs may squeeze your travel budget; however, a customized policy can offer peace of mind during your travels and potentially save you tens of thousands of dollars.
These policies provide coverage for circumstances beyond your control, such as trip cancellations or delays. They also compensate for related logistical complications like missed connections, lost baggage, and baggage delays. Beyond trip logistics, travel insurance can encompass emergency medical coverage, spanning accidents, illnesses, evacuations, and repatriation.
The travel insurance sector is very competitive, resulting in a diverse range of plans offered at various price levels.
When Should You Consider Travel Insurance?
Typically, expensive trips and those with lots of prepaid non-refundable tours / day trips are well suited for travel insurance as the potential for loss is often greater than we are willing to lose. Many of us have experienced cancellations, missed connections, and unexpected illnesses while travelling.
Certain locations pose an elevated travel risk related to natural disasters, political instability, and national health concerns. Other locations have substantially higher than average medical costs.
Special consideration should be given when travelling to countries that are remote and offer limited medical services. An emergency may require costly medical evacuation to a distant location in order to obtain lifesaving medical procedures.
If you have a pre-existing medical condition, travel insurance with such coverage can be critical for international travel to ensure you have access to medical care while protecting your wallet.
When Should You Decline Travel Insurance?
Not all travel requires insurance. If you can absorb the financial loss, effectively self-insuring yourself, you may choose to decline travel insurance. A weekend getaway with minimal prepaid expenses may fall into this category.
Medical insurance is an integral part of travel insurance. Your existing comprehensive health coverage may provide adequate protection. This coverage may be derived from your employer group benefit plan or credit card that you used to pay for your trip.
Similarly, your credit card may provide coverage for some of the key coverages highlighted below. Be careful to read the fine print as not all credit card offerings are equal. Also, some coverages like Cancel for Any Reason are often only available through a travel insurance agency.
Customized Polices to Protect You and Your Wallet
Flexible travel insurance coverage is achieved through a wide range of plans, each tailored to meet specific needs. With options for trip duration, destination, and coverage types, you can customize your protection.
Tiered plans offer varying levels of coverage, providing choices that align with both your preferences and your budget. Additionally, optional upgrades allow for further customization, enabling you to enhance your coverage with features like rental car protection or adventure sports coverage.
This adaptability ensures that you can confidently address your unique concerns and preferences. Overall, the diversity in travel insurance plans allows for a personalized approach to risk management, providing you with comprehensive coverage for a variety of travel scenarios.
What Does Travel Insurance Cost?
Typically, you can expect travel insurance to cost you approximately 5% of your non-refundable trip expenses. This rate will fluctuate based on several factors including coverage limits selected, destination, trip duration, activities covered, age, health status, and more.
While five percent may appear steep, it's a modest investment for the financial security and peace of mind it provides.
On a $10,000 trip for a family of four, this equates to $500, a fraction of potential expenses incurred due to unforeseen events.
Consider the scenario of a canceled flight leading to additional costs for accommodation, food, airport transportation, and more, which could easily exceed the initial insurance expense. Contemplate the potential financial loss if the entire trip had to be canceled without coverage.
So, let’s look at what’s covered.
Key Travel Insurance Coverages
You should consider the following key coverages when shopping for travel insurance.
Trip Cancellation Insurance Coverage
This often covers unforeseen circumstances including, but not limited to, illness, injury, death (traveler, traveling companion, family member), inclement weather, natural disasters, terrorist acts, and jury duty.
Trip Interruption Insurance Coverage
This provides coverage for trips that are unexpectantly cut short. It may cover illness, injury, death (traveler, traveling companion, family member) natural disasters, mandatory evacuation, and more.
Missed Connections, Lost Baggage, Delayed Baggage Insurance Coverage
Missed connection insurance covers expenses if a connecting flight is missed due to delays. Lost baggage insurance reimburses for permanently lost items, while delayed baggage insurance covers temporary loss expenses. These insurances collectively provide a safety net for various travel logistical challenges.
Medical Insurance Coverage
Your government health insurance (federal, state, provincial) plan will not likely cover you for medical treatment outside of your country. Some employer sponsored group benefit plans may include a degree of coverage for international travel. For many people, a travel insurance policy is the only option for complete medical coverage while travelling abroad.
Medical, accident, and sickness coverage in travel insurance typically include reimbursement for emergency medical expenses, hospital stays, evacuation due to unforeseen illness or injury, dental emergencies, and other urgent care requirements that occur during your trip.
This coverage often extends to treatment for unexpected medical conditions, accidents, and, in some cases, pre-existing conditions that may worsen while traveling.
Additionally, many travel insurance policies also provide accidental death and dismemberment coverage, offering financial protection in the unfortunate event of a fatal accident or severe injury.
Valuable Coverages to Consider
The following coverages are often contained in a premium tier policy or as an optional upgrade. Not all insurance providers offer these highly sought after coverages, therefore, be diligent and make sure you find a provider that gives you the coverage you desire.
Pre-existing Conditions Waiver
This waiver ensures coverage for medical conditions existing before the policy's start date, typically under specific conditions.
These conditions often require you to purchase the insurance within a specified time frame after making your initial trip deposit and may involve meeting certain eligibility criteria, such as being medically stable.
Cancel For Any Reason
This gives you the flexibility to cancel your trip for a variety of reasons. Whether due to a change in personal plans, work commitments, or unforeseen events like family obligations, this coverage allows you to cancel without the need for a specific reason. This unique feature ensures a higher degree of control and financial protection.
Cancel For Interruption
This offers you the flexibility to interrupt or cut short your trip for various unforeseen reasons. Whether it's due to a personal emergency, unexpected work obligations, or a covered event that disrupts travel plans, this coverage provides reimbursement for non-refundable expenses and additional costs incurred.
Cancel For Work
This coverage is especially valuable if you have professional commitments that may impact your travel plans. This coverage allows you to cancel your trip if work-related obligations arise unexpectedly, such as last-minute assignments, mandatory business meetings, or unforeseen job responsibilities.
Adventure Travel / Extreme Sports
These specialty policies or upgrades are essential if you plan on rock climbing, scuba diving, or participating in other high-risk adventures.
In the event of accidents, injuries, or trip interruptions related to these activities, this coverage provides the necessary support by reimbursing medical expenses, evacuation costs, and non-refundable trip expenses, allowing you to pursue your passions with added peace of mind.
Travel Insurance Exclusions
Canceling your trip due to a change of heart is not permissible unless you secure the cancel-for-any-reason coverage mentioned earlier. Generally, trip cancellations must stem from circumstances beyond your control.
Similarly, medical coverage is for unexpected medical emergencies. Therefore, you will not be covered for things like elective procedures, mental health disorders, self-inflicted injury, routine physical examinations, normal pregnancy, flying an aircraft, or extreme supports (see above).
The list of exclusions can be extensive and will be clearly outlined in your insurance certificate. You should read this section carefully before committing to the policy as specific exclusions will vary by policy.
Other Travel Insurance Related Services
Most travel agencies offer additional services outside of the insurance certificate. These services often include 24/7 travel assistance, medical assistance, identity theft services, concierge services, and more. Many have multilingual agents ready to serve at your convenience.
When Should You Buy Your Travel Insurance?
To obtain the full benefit of your insurance policy, we recommend purchasing travel insurance as soon as you book your trip. Your trip interruption coverage will not commence until you pay for your insurance policy. Any time gap between paying for your trip and paying for your insurance policy leaves you financially vulnerable.
Typically, purchasing your policy early also saves you money as some providers provide early purchase discounts and the cost may increase the closer you get to your departure date.
If you want to secure a pre-existing condition waiver, you will likely need to purchase your travel insurance within 14-21 days (varies by insurance policy – read the fine print) of making a deposit on your trip.
When Should You Research Travel Insurance
We recommend you start researching your travel insurance options as soon as you start daydreaming about your next vacation. Do not simply wait until your travel agent offers you their standalone insurance policy option. Such may not meet your specific needs from a coverage or price perspective.
We invite you to read our complimentary Travel Insurance Guide for an in-depth dive into the world of travel insurance. We have aligned ourselves with 12 leading edge insurance providers and done our due diligence on their respective product offerings. Our independent review of these companies will help guide you to find the customized policy coverage you require for a price that fits your budget.
FINAL THOUGHTS
Travel insurance can provide you peace of mind and potentially save you tens of thousands of dollars.
Consider your financial risks related to your non-refundable trip costs and potential medical expenses. Review existing coverages that you may have through your employer sponsored group benefits plan and your credit cards. Any gaps in coverage can be covered by travel insurance policy.
We are confident that you will be able to customize your insurance coverage to protect your trip and your wallet.
