When to Buy Travel Insurance

Lori Park, a Chicago-area resident, 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.

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 that the two women had purchased before setting sail.

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

Do You Need Travel Insurance?

There are five broad types of travel insurance: flight policies that pay out if your plane crashes; baggage insurance to cover damaged, lost or stolen luggage; interruption/ cancellation insurance to repay 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 that insurance can help people avoid potentially catastrophic costs, as it did for the Parks. But it is not necessary for everyone.

“Insurance adds about thirteen percent to the cost of a trip,” says Jay Smith, president of Sports Travel and Tours in Hatfield, Massachusetts, which specializes in sports trips. “If someone is traveling locally, or if the airfare is refundable or usable in the future, and the hotel has a cancellation prior to travel — even if it is 48 hours before —then there isn’t a real reason for insurance.”

You don’t need insurance that covers the cost of lodging and airfare if you plan to stay with friends and buy your ticket with redeemable frequent flyer points. You would insure just for events that would expose you to big financial losses (for example, developing a serious illness requiring hospitalization or missing a cruise because of flight delays).

How to Shop for Travel Insurance

To find an appropriate policy, you should consider the kind of coverage you need and how much risk exposure you can afford, and then shop around for a low premium.

Insurance companies set the cost of a policy by looking at your destination, modes of transportation (scheduled airline or charter? rental car or taxis?), lodgings (cruise ship? resort? AirBnB?), activities (swimming with sharks? skydiving?) and the local weather (hurricane season in the Caribbean?).

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

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

The cost of travel insurance will depend on how much medical and evacuation coverage you buy. Higher dollar limits are better, but more expensive. You may want to consider “cancel for any reason” coverage, which, as the name implies, will reimburse 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 trip costs, especially during hurricane season,” says Dan Drennen, director of sales and marketing for the Travel Insurance Center in Omaha, Nebraska. “If you have valid trip cancellation-interruption coverage which was purchased prior to a storm being named, then you can rest easy knowing that if a hurricane does ruin your trip, it won’t destroy your bank account.”

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

“There’s no grief like having to [pay] $100,000 to have her husband’s remains taken care of and shipped home,” says Caraker. “There are people who can afford that, but most can’t.”

It’s not just how much you might lose if you can’t or don’t take this trip; it’s how much will a replacement vacation set you back? How much more expensive will transportation, accommodations and activities be next year, or the one after that? And when will you have a chance to take that vacation, particularly a bucket-list trip requiring coordination of vacation days for members of several families?

How to Save Money on Travel Insurance

Just as coverage can vary from one insurer to another, so can price. To save money on insurance, start by checking your credit card to see if it provides coverage. If you choose to pay for insurance, buy as little as needed — if your luggage is valued at $2,500, don’t insure it for $15,000. If you pay for a cruise, resort or flights with replaceable 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 will need a travel insurance policy that will reimburse medical costs abroad. If you travel frequently, consider an annual policy that covers all of your trips.

If you are paying for your vacation in installments before you travel, 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 have put down only a 10% deposit.

Determine what a pre-existing condition is. Generally, if you have diabetes, for example, that’s only considered “pre-existing” if your medication is changed within two weeks or so of your departure.

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