Are you planning a family trip and wondering whether or not buying the additional travel insurance is a good idea? While having a travel insurance policy can potentially save you from a trip-related financial disaster, many travelers are confused about what a travel policy will, and more importantly, will not cover. Before handing over your money for a trip insurance plan, learn a little more about the benefits and drawbacks for these types of policies.
Four Things Trip Insurance Will Typically Pay For
All travel insurance coverage is not the same, so it is crucial for you and your spouse to take the time to read any policy you are considering purchasing thoroughly, and not just assume it will cover a particular problem. What does trip insurance cover? The vast majority of plans will offer financial reimbursement and assistance for the following four situations:
1. Trip Cancellation
Transportation, hotels, and tour packages are not cheap. When you need to cancel your plans due to an emergency, you can be out thousands of dollars, if you do not have a travel insurance policy. Of course, an insurance company won't reimburse you for prepaid, non-refundable expenses for any reason. Make sure you know which circumstances apply before changing your plans. One notable difference for some policies is how pregnancy is treated. If you cite news of a pregnancy as a reason for cancellation, some policies do not view this news as a covered situation.
2. Medical Emergencies Abroad
Even the best insurance in the U.S. may not pay for your medical costs when you are traveling overseas. It's a good step to review your health insurance before a big trip to see if travel outside of the US or something like a cruise is covered partially or at all. Travel insurance can help pay hospital and doctor bills while you are traveling. Some travel insurance policies will also pay the high price of a medical evacuation if your condition demands it.
3. Lost Luggage
Luggage gets lost more often than you think, and the airlines are seldom willing to pay more than a few hundred dollars if your bags go missing. Arriving at your destination without your bags, and needing to replace your items is costly. Your travel insurance can help to defray some of this expense. Not everything is covered, so be sure to keep your most valuable possessions with you at all times.
4. A Travel Hotline
When you travel, things don't always go as you planned. Whether you lose your tickets, miss a connecting flight, or just need emergency telephone translation to sort out a misunderstanding, some travel insurance policies offer a travel assistance hotline to help you out. Don't underestimate how valuable assistance with sorting out something like missed connecting flights could be.
"Though we travel the world over to find the beautiful, we must carry it with us or we find it not." Ralph Waldo Emerson
Four Things Travel Insurance Will Not Typically Pay For
1. Unspecified Medical Care
Most policies have an extensive list of covered medical procedures but don't expect the company to pay for anything else. These uncovered expenses include pre-existing conditions, mental health, emergency care for injuries occurred during risky activities, accidents resulting from ignoring local regulations, and costs associated with pregnancy or childbirth. Some policies may offer optional coverage for certain situations.
2. Canceled Tours or Bookings
While most travel insurance policies will cover your costs if you cancel your trip, most will not pay out in the event the provider of the services doesn't live up to their end of the agreement. Just because the travel guide you booked online doesn't show up, doesn't mean you can make a claim. Getting a refund from the service provider will fall directly on your shoulders.
3. War or Civil Unrest
Canceling a trip or cutting your visit short because of violence at your destination is not typically covered by travel insurance policies. Make sure to review the US State Department's Travel Advisory before booking your trip to any potentially dangerous areas of the world. Most travel insurances won't cover injuries occurring during civil unrest.
4. Bad Weather or Medical Outbreak
If you decide to cancel your trip because there are reports of potential severe weather or a medical outbreak where you are planning to visit, and you cancel your trip, then you likely won't be getting a refund. Note that policies generally make a distinction between if you cancel due to bad weather compared to company you booked with making a decision based on weather (i.e. Cruise line or hotel cancelling reservations due to a hurricane).
A Word About Credit Cards and Travel
It's worth noting as you think about this question that your credit card may have some protections built in already. Some of the situations above can be covered by certain credit cards when used to pay for your trip. These cards are generally, but not always, travel reward cards. It there's a specific part of your trip you're worried about, the card you use to pay could already cover the situation. One example is flight cancellation. Some cards affiliated with an airline cover cancellation by the airline. Be sure to read fine print for exceptions and conditions before assuming your family is "covered."
"Then you will walk on your way securely, and your foot will not stumble. If you lie down, you will not be afraid; when you lie down, your sleep will be sweet. Do not be afraid of sudden terror or of the ruin of the wicked, when it comes, for the Lord will be your confidence and will keep your foot from being caught." Proverbs 3:23-26 ESV
Trip insurance may make sense in some situations, but not always. There are many great reasons to protect yourself with travel insurance, but know the limits of your policy to avoid a nasty surprise.
We help Christian families on their journey to financial freedom. If you would like more posts from us on how to balance what's truly important with your finances, please sign up for our free newsletter. If you’d like to hear more about how Intrepid Eagle Finance helps families manage their financial lives, click here to learn more and schedule a free consultation.