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What Is Travel Insurance and Do I Need to Buy It?

By Kalen Smith

car highway waves crashFinding a flight with the fare you want is tough enough. When you consider the taxes and surcharges, extra fees for baggage, the cost of travel to and from the airport, and an extra five bucks a pop for a bag of peanuts, the last thing you want to add to your airfare’s bottom line is travel insurance.

Then again, when you’re already spending a few hundred dollars, protecting your itinerary with affordable travel insurance could turn out to be the best fee you ever pay.

Though you may not be someone who often pays for a little peace of mind, travel insurance can help you cut your losses in many circumstances, like:

  • Medical expenses
  • Loss of traveling equipment
  • Damage to rental properties
  • Theft
  • Legal expenses
  • Trip cancellations

Do You Need Travel Insurance?

Travel insurance isn’t like car insurance. No one is going to make you use it. And unlike health insurance, it’s not necessarily inevitable that you’ll need it at any point in time. But when you consider the high cost of travel and the potentially low cost of insurance, travel insurance is often a worthwhile investment.

Travel insurance doesn’t only protect the expense of your flights. It can also help cover, for example, expenses associated with other risks of traveling, like needing medical care in other states or even overseas. Your primary health insurance might not cover major expenses that you encounter outside of your home state, and in other countries you’re almost guaranteed not to get coverage.

Travel insurance can provide temporary relief and ease the pain of unexpected medical needs during your trip. Consider these four main motivators for purchasing a policy:

  1. Traveling to a location, particularly abroad, where you have a higher chance of getting seriously ill
  2. Planning adventurous or dangerous activities, like white water rafting, scaling a mountain, or hunting wildlife
  3. Traveling with expensive luggage or important business documents
  4. Visiting a dangerous political climate, like a country that’s at war, unstable, or vulnerable to attacks, or a place with high kidnapping risks

Questions to Ask Yourself

As bad as it may feel to overpay for a policy, it’s worse to be stuck in an emergency without the coverage you need. Avoid the frustration of being too late to find out what your plan doesn’t cover by asking yourself the following four questions.

  1. What do I need? This question is probably the hardest one to ask yourself. Think about why you are traveling and related concerns, like traveling with young children or transporting valuable property. Some risky destinations will require some extra coverage. If you’re booking holiday travel and paying for expensive flights, a low-cost policy might provide all the protection you need. If you’re facing a family crisis that can cause sudden changes in your plans, make sure you get a policy that will cover family emergencies.
  2. How often will I be traveling? If the only time you travel is to see your parents during Christmas, then you might as well pay for coverage for that one trip. On the other hand, if you’re a frequent business traveler or if you take your family on a few trips each year, take the option of annual coverage instead. Single trip policies add up quickly.
  3. Where am I going? Many policies and prices are built to cover everyone and everything, everywhere. If you have an early sense of where you’re going (and when), you can customize your plan and avoid paying built-in premiums for places you will never visit. If you’re only flying within the United States, then you can cut your cost with a domestic-only plan. Even if you’re traveling internationally, you still don’t need to pay for worldwide coverage. If you are only planning on traveling to Madrid, for instance, you’ll save by arranging for coverage in Spain only.
  4. Do I need special accommodations? If you’re elderly or disabled, you may have to pay a lot more for coverage. Instead of paying higher premiums with the first provider your airline recommends, look for a specialist provider. Certain companies are built to keep rates as low as possible for specific populations.

Types of Travel Insurance Packages

Travel insurance gets a bad reputation sometimes, often because participants don’t know the details about the types of insurance and levels of coverage. When you have time to shop around, instead of rushing the insurance decision while booking your tickets, you have a better chance of spending less money and getting the coverage you need.

Most importantly, you have the option to choose between the single-trip policies you often consider when booking and the lesser-known annual policies, which provide coverage for every trip you make in a year. Generally, annual policies cost around the same amount as three or four single-trip packages, so you don’t have to be a weekly business traveler to see the benefits of a year-round plan.

You can pick a customized plan for yourself, your family, or your business, and students and healthy senior citizens can often get coverage at discounted rates. While you’ll be able to choose between domestic and global policies, you can also take advantage of cost-effective policies that limit your coverage to the specific area where you’ll be traveling.

You can also choose a policy that’s limited to specific events, like flight accidents, accidental death, and rental car issues. These policies often overlap with major medical plans, but many conventional packages don’t cover medical expenses. Especially if health is your reason for getting insurance, you owe it to yourself to research policies with medical coverage.

Since medical policies are usually separate from the standard package plans that travel insurance companies provide, they’re usually more expensive. Most of them only cover a limited range of medical expenses, but the best policies cover some non-medical expenses, like reimbursements for canceled trips. These policies are often the most budget friendly, since they can ease the burden of your standard package plan. Major providers offer plans with benefits like the ones you receive at home, such as prescription benefits and non-urgent care costs.

Final Word – Shop Around

Buying a travel policy may be worth it for the peace of mind that comes with knowing you can face an emergency or surprise expense, but the insurance business is just like every other industry when it comes to pricing. Some companies will charge a lot more than others. Look closely at each provider and make sure you understand their policies before committing.

Also, don’t just familiarize yourself with prices. You also need to know which plans give you the biggest bang for your buck, and that might mean paying a little bit more to make sure you get the benefits you need. With online comparison sites like Squaremouth, InsureMyTrip, and QuoteRight, you can get an overview of the entire market and choose your plan more carefully.

The best solution is to be prepared and know your travel plans ahead of time. Know how frequently you are traveling, where you plan on going, and what you need, and you’ll be in a better position to purchase the policy that works for you.

Have you taken advantage of travel insurance options? What did they cover for you, or what did you feel was missing?

(photo credit: Shutterstock)

Kalen Smith
Kalen Smith has written for a variety of financial and business sites. He is a weekly contributor for Young Entrepreneur and has worked as a guest blogger on behalf of Consumer Media Network. He holds an MBA in finance from Clark University in Worcester, MA.

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Comments

  • http://savvyyoungmoney.blogspot.com Savvy Young Money

    Don’t forget to check your credit cards first. Some cards like Visa Signature and American Express offer travel and car rental insurance when you purchase tickets/rent cars. Call up the card issuer to see what benefits and coverage are available, it may save you some money.

  • http://www.insurance-spain.com Insurance Spain

    Just backing up the article which is very true, the Spanish public health system is not a place for a foreigner to have to use with all the language difficulties. Travel insurance means private health care with English-speaking care i.e. doctors and nurses. I live in Spain so I know!

  • http://www.engineer-a-business.com Kalen

    Thank you for the feedback. I never even thought about the language barriers in that sense o be honest. That just adds even more complications to the whole issue and is one more reason why you may need travel insurance, just communicating is essential!

  • http://www.moneycrashers.com Kalen Smith

    Thank you for the feedback. I never even thought about the language barriers in that sense o be honest. That just adds even more complications to the whole issue and is one more reason why you may need travel insurance, just communicating is essential!

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