Travel insurance: Think early, not later
As you plan your 2019 travels, think about insurance needs early. Buying within two weeks or so before you make your first advance payment lets you avoid one of the most vexing insurance problems: exclusion of benefits due to pre-existing medical conditions. You may not need travel insurance at all, but if you do, you need to buy early. Your primary insurance focus should be on two major bigdollar risks:
• You have to cancel or interrupt a trip for which you made large deposits and prepayments that are either nonrefundable or carry heavy cancellation penalties – penalties that are too stiff for you to just walk away from and forget if you have to cancel.
• You face medical costs during your trip that your regular medical plan doesn’t cover – either doctor/ hospital bills or hyper-expensive emergency evacuation back home.
Trip Cancellation and Interruption (TCI). If you have to cancel a cruise, tour, vacation rental, or many other prepaid travel services shortly before departure because you got sick or suffered an accident, you stand to lose a big chunk of your advance payments due to nonrefundability or cancellation penalty. Depending on circumstances, those losses could extend to several thousand dollars – more than you’d willingly ignore. TCI covers and pays for any prepayments you can’t recover from suppliers, along with what you can’t recover from suppliers if you have to interrupt a trip and return home early. Coverage isn’t limited to problems you might face personally; it includes problems with your travel companion or a close relative who isn’t traveling.
The main difficulty with most TCI is that payment is limited to “covered reasons” specified in the contract and to events unforeseen at the time you buy. Covered reason lists are generally generous regarding medical problems and injury accidents. And although most TCI policies exclude pre-existing medical conditions as “covered reasons,” most policies waive that exclusion provided you buy the insurance within a specified period after you make your first prepayment for the trip – anywhere from a week to a month, depending on the company. A waiver of preexisting condition limitations does not add any cost; you just have to arrange it early.
But covered reasons on most policies do not include work emergencies, destination unease, and many other cancellations, and that can be serious. Over decades of travel, I’ve never had to cancel a trip for a typical covered reason, but I’ve had to cancel a handful because of unexpected work demands. That’s why I recommend the optional “cancel for any reason” coverage that is available on a substantial number of policies. Often, it’s an expensive add-on, and it may not offer full 100 percent coverage, but it insulates you from potential problems regular insurance doesn’t cover.
Medical. Your regular health insurance may well cover you when you travel, and although Medicare doesn’t cover you outside the U.S., supplements C and higher offer modest foreign-country benefits. That’s enough for many travelers. But the serious financial risk is if something really big happens to you – big enough to require evacuation from some remote area by helicopter or private jet that can run into tens of thousands of dollars – that many health policies don’t cover. Medical benefits in travel insurance cover these unlikely but extremely consequential risks. As with TCI, you can waive pre-existing medical condition exclusion by buying early.
Other. Many travel insurance policies also cover lots of small stuff, such as delayed bags and delay expenses, but those are typically small-dollar risks. If a policy you’re considering for the big risks includes these minor coverages, fine, but they’re not the main reason to buy. And if some combination of your insurance and your credit card already covers you, covering twice wastes money.
The takeaway: If you don’t face a big financial risk, you probably don’t need insurance; if you do face a big risk, you do. Don’t blindly take whatever your airline, cruise line or tour operator suggests; instead, check the big online travel insurance agencies that publish elaborate side-by-side comparisons of different policies, including insuremytrip.com, quotewright. com, squaremouth.com and others.