Whenever we book a trip for a client, we always ask if they want travel insurance. While the topic of insurance can be complicated and sometimes boring, the fact is it’s very important in terms of financial intelligence. When you’ve booked as many trips as we have (literally thousands), you hear of all sorts of problems. In our experience, they generally fall into two categories:
- Traveling typically takes us away from our loved ones. Some examples:
- Their parents go to the hospital
- They have a condition that occurs and their doctor advises against travel
- Their pet dog of 15 years dies suddenly
- Their daughter gets into an car accident and needs immediate help
- Traveling does have certain risks. We have seen clients that:
- Require hospitalization in a foreign country
- Miss days of their vacation due to missed flights (outside of their control)
Trip Cancellation protection
The first category falls into the realm of trip cancellation protection. This type of insurance protects your investment – could be any time between initial deposit and final payment. Each travel supplier (cruise line, tour operator, airline, hotel) has very different terms and conditions like payment schedules and cancellation schedules. Interestingly we find most clients don’t really pay attention to these payment terms when comparing trips – but they are incredibly important. Suppliers which require more non refundable payments earlier, increase the travelers’ exposure to trip cancellation risk. The higher the risk, the more likely trip cancellation protection insurance pays.
Medical Cost protection
The second category is about medical cost insurance and trip interruption protection. Do you want to trust your cruise line to get you to the best hospital available in Hungry for example? Do you want to be offered medical services based on your ability to pay in the moment? Note that foreign countries don’t recognize US insurance companies. So this type of insurance can pay not only for medical costs incurred while traveling but also for medical evacuation costs. And of course costs associated with trip interruption.
So should you get travel insurance? This is a person decision of course. When we travel, we always get it for ourselves. Always. Why? The insurance typically costs a mere fraction of the vacation cost, but covers the catastrophic costs (if you get the right policy). Like all insurance, it offers piece of mind. One reason most people vacation is to “get away from it all”, in other words to not worry about things. Why invite something to worry about? We’ve seen way too many of our clients regret not buying insurance. Or course you never want to use insurance. Just like your house – you purchase fire insurance – but you never want to collect on that policy. But if your house does burn and you hadn’t purchased insurance, you will surely have regrets.
One of our favorite third party insurance companies is Allianz Global Assistance; they have a nice website if you’d like to learn more: https://www.allianztravelinsurance.com/travel/planning/how-travel-insurance-works.htm
There’s many parameters to consider when determining if buying travel insurance makes sense to you:
- Distance from home
- Type of vacation (adventure, sedentary)
- Geopolitical issues
- Cost of the trip
- What you can afford to lose financially (and emotionally)
- And the big one: cost of insurance
Once you make the decision to purchase traavel insurance, there’s a variety of other questions
- The type of policy – a primary policy or a secondary policy,
- How much to purchase,
- When to purchase
- From whom to purchase (third party vs supplier)
More on these in later posts.
A great travel agent can help you sort through these. Contact us if you ‘d like to discuss any of these factors for your own personal situation.