What does travel insurance cover?

There are five primary coverages to consider

Trip cancellation

Provides reimbursement for non-refundable trip payments and deposits if a trip is canceled due to illness, death or other specific unforeseen events. The description of coverage (“DOC”) will note which events are covered and the maximum amount payable.

Setting the stage

  • Tours and cruises usually require the entire trip cost be paid prior to departure. This can be a large amount especially if multiple family members are traveling. Even if you travel on your own, international airfare, for a family, can run thousands of dollars. How much will be refunded in case you are forced to cancel your trip? Many travel suppliers use a sliding scale where they provide less of a refund the closer to the departure date. In many cases, a traveler will be entitled to no refund if canceling shortly before departure.

The accepted “reasons for canceling” are listed in the policy

  • If it’s not listed it’s not covered. In order to obtain reimbursement, under this coverage, your reason for canceling must be one of the reasons that are specifically noted in the policy’s DOC. Each reason will have specific language when it applies. A “cancel for work” reason does not mean you can just forego your trip because you are busy at work. Read the DOC very carefully before purchasing.
  • If Trip Cancellation is important to you, find a policy that includes the specific reasons you want covered.

Coverage

  • Usually, the benefit will be 100% of the covered trip cost. Travel Guard, for instance, defines trip cost as the total prepaid and non-refundable expenses already submitted toward the trip regardless of who booked the arrangements. It does not include estimated or anticipated costs that have not yet been paid.
  • If you are required to make multiple deposits at different points of time, you will need to add each one to the policy’s trip cost after you make the deposit.
  • Some policies will offer “cancel for any reason” coverage. If offered, this will usually be as an upgrade to one of the basic packages at an additional cost. Be careful with cancel for any reason because the maximum payout might be just a percentage (e.g. 50%) of the forfeited deposits.
  • Trip cancellation usually has a clause that states coverage must be purchased within so many days of booking your vacation.

Costs

  • The cost for this coverage will be based on the total trip cost. The higher the trip cost, the more expensive this coverage will be.

Factors to consider – these are just a few

  • The amount of time between the booking and departure dates. You might be less likely to cancel a trip booked at the last minute.
  • The age and health of the people traveling. Young children or older travelers might be more prone to health issues forcing a cancellation.
  • Weather – are you traveling during the hurricane season?

Why purchase trip cancellation coverage

  • Simply put, you should consider purchasing trip cancellation coverage if you do not want, or cannot afford, to lose the non-refundable portion of your trip payments if you have to cancel your trip.

Suggestion

  • Trip cancellation has to be purchased within so many days of the initial trip deposit. Prior to booking your trip, determine the amount of the non-refundable payments, consider the factors that might cause a cancellation, identify how much trip cancellation will cost and then determine if you want to purchase trip cancellation coverage.

 Trip interruption

Provides reimbursement for non-refundable trip payments and deposits if a trip is interrupted due to illness, death or other specific unforeseen events. The DOC will note which events are covered and the maximum amount payable.

Setting the stage

  • Trip interruption works fundamentally the same as trip cancellation except it covers non-refundable trip payments if the traveler is unable to continue the trip for reasons covered by the policy.

The accepted “reasons for interruption” are listed in the policy

  • If it’s not listed it’s not covered. In order to obtain reimbursement, under this coverage, your reason for interruption must be one of the reasons that are specifically noted in the policy’s DOC.

Coverage

  • Many times, the benefit will be 150% of the trip cost. In addition to reimbursement of any forfeited, unused trip costs, the benefit normally covers additional costs for transportation to return home.
  • Many policies will include trip interruption coverage even if you do not have trip cancellation coverage and you noted zero for trip costs. The benefit will be a flat dollar maximum amount to assist you in returning home or rejoining the trip.

Why purchase trip interruption coverage

  • Similar to trip cancellation, you should consider purchasing trip interruption coverage if you do not want, or cannot afford, to lose the non-refundable portion of your trip payments if your trip is interrupted while you are traveling.

Emergency medical

Provides payment for the cost of emergency medical or dental treatment while the insured is traveling.

Setting the stage

  • You can become sick or injured at any time and require medical treatment – an injury while hiking, a food borne illness, a heart issue. It doesn’t matter if you’re healthy or have health issues. It can happen to anyone. At some point in your travels, you will probably require medical attention. One question to consider is “how will I handle it financially”.
  • If you do require medical treatment, who is going to pay the medical providers (hospital, doctor, etc.)? Unless the treatment is free, most providers require payment at the time services are rendered. If your health insurance covers you outside of the country, they will usually require you to pay for the services and then seek reimbursement.

Coverage

  • Benefit limits can range from $25,000 to $250,000 or more for short trips or long trips.
  • Primary vs secondary coverage – policies will offer primary (meaning this insurance policy pays before any other source of coverage) or secondary (meaning this insurance policy only pays after other insurance has been filed and paid) coverage. If you take out a plan that has secondary coverage and you have no other medical insurance, then the coverage should become primary by default. Verify with the insurance company.
  • Payment upfront. Some medical facilities might require payment upfront before services are provided. Some travel insurance medical plans will arrange for care and transportation to the medical facility and make the upfront payment to the medical facility so you don’t have to. You will need primary coverage for this to happen. If this feature is important to you, make sure to find a policy that provides this.
  • Services covered can include: transportation to the hospital, services of a physician, charges for hospital stays and operating rooms, charges for treatments, exams, tests, medicines and other services or supplies.
  • Pre-existing conditions are usually not covered by travel insurance plans even though your current health care plan may be covering it. However, with many travel insurance policies, you can obtain a pre-existing condition waiver, if you 1) purchase the plan within a certain number of days (defined by the company) after the initial trip deposit 2) insure for the full cost 3) be medically cleared for travel at the time of purchase 4) cover the full trip duration.

Costs

  • Dependent upon several factors including the age of the insured, the length of the trip, the limits and if primary or secondary.
  • Primary coverage might not be much higher than secondary coverage. Check on this when looking for a plan.

Factors to consider

  • Do you have health insurance that will cover you while traveling outside of the U.S.? Note that Medicare will not cover you outside of the U.S.
  • If you are covered, your insurance company probably will not make payment directly to the medical provider. This is much different than when you travel in the U.S. You will most likely be required to make payment and then seek reimbursement from your health insurance company. Do you have the ability to cover these costs until you can be reimbursed?
  • Some countries might provide free emergency medical coverage.

Why purchase emergency medical coverage

  • You should consider purchasing emergency medical coverage if you want medical insurance while traveling, added protection to your existing health insurance plan or to have your medical costs paid directly to the health providers for you – and a little piece of mind! In addition, consider the activities you will be doing on the trip.

Suggestion

  • Prior to traveling, inquire if your existing health plan (if you have one) covers you and what the payment process is, consider what activities you will be doing (anything susceptible to injury), how you will pay for medical expenses if incurred, identify how much coverage will cost and then determine if you want to purchase emergency medical coverage.

 Medical evacuation and repatriation

In general, this covers 1) transporting the insured from the place where they are sick or injured to the nearest hospital, or medical facility, where appropriate medical treatment can be obtained 2) after being treated at a local hospital or medical facility, the insured’s medical condition warrants being transported home to obtain further medical treatment or recover OR 3) both 1) and 2) above. Transportation includes any Common Carrier, or other land, water or air conveyance, required for an Emergency Evacuation and includes air ambulances, land ambulances and private motor vehicles. Repatriation of remains arranges for the insured’s body to be returned home if they die during the covered trip.

Benefits

  • The benefit can range up to $1M or more.
  • Emergency evacuation (transportation to the nearest medical facility that can treat your medical need), medical repatriation (transportation home if medically required) and repatriation of remains (transportation home in case of death) can all be covered.
  • Medical facility of your choice – some plans will cover transportation to the medical facility of the insurance company’s choice and some will cover transportation to the medical facility of your choice (or to your home). If this is important to you, look for this additional benefit. Sometimes, it might be available as an upgrade for an additional fee and sometimes you might have to purchase the policy within a certain number of days following the initial trip payment.

Costs

  • Emergency medical and medical evacuation coverage is not very expensive. For example, a Travelex Travel Select policy (as of Sep ’14 through Squaremouth.com) with $50,000 in primary emergency medical and $500,000 in medical evacuation for a four week trip to Thailand for a 60 year old person costs just $64.00. For a 45 year old person, the cost is $47. For a 30 year old person, the cost is $37. Not much for piece of mind and protection in case you need it.

Why purchase medical evacuation coverage

  • To provide transportation to the nearest appropriate medical facility if you are injured, in an accident or become sick and/or to provide transportation back home if you’re unable to travel on a Common Carrier (e.g. an airplane).
  • You probably will not need to be medically evacuated; however, if you do, the costs can be very, very high. Will your normal health insurance plan cover these costs? Can you afford to cover these costs on your own?

 Delay, loss and theft

There are several types of coverage that reimburse the insured for bag loss and travel delays. Most travel insurance plans will cover baggage and personal items lost (limits will be per person and/or per item) and expenses because of delays in their travel such as a missed connection (expenses might be unplanned housing) or delays in their bag getting to their destination (expenses might be personal items or clothing).