Planning to Travel? Consider Travel Insurance

By Samer Eshmawy, CFP®

Financial Advisor

June 23, 2024

The destination has been determined and the plans have been made. Passports are in hand, the hotel is booked, the flights purchased, and the bags are out and are ready to be packed. You have carefully thought about and planned for every detail of this trip, and you are ready to go.

But are you ready for the unexpected?

While no one knows or wants to think about what hiccups could happen before or during a dream vacation, it’s a good idea to prepare for the possibility that something could go wrong along the way. This is where travel insurance can help take the financial sting out of a disappointing upset in your plans.

What is travel insurance?

Travel insurance is insurance you can purchase, before you travel, that will cover you financially for that specific period of time in the event that something goes wrong , such as unexpected hotel stays or lost luggage due to a cancelled flight. It can also cover certain medical needs if you need to see a doctor, have a medical emergency or need to medically evacuate from one location to seek care elsewhere.

Should I buy travel insurance?

There are some pros and cons to travel insurance and some instances where it may be more recommended. Here are a few considerations to help you decide if it is right for you.

Medical Care and Emergencies

Travel insurance is most often purchased when planning a trip abroad. Many domestic health insurance plans, including Medicare, do not cover you if you are traveling in a foreign country. A travel insurance policy may offer reimbursement for certain out-of-pocket costs related to emergency medical and dental care while traveling abroad. To help you determine if travel insurance in addition to your current medical insurance is needed, start by evaluating your insurance coverage. Determine what is covered if medical treatment, hospitalization or even dental care is necessary while visiting your foreign country of choice, and then examine whether a travel insurance policy can enhance your coverage in case of an emergency.

Consider the potential need for medical evacuation or “medivac” services coverage that a travel insurance policy may offer. This is especially important if you expect to visit more remote destinations and may have concerns with their medical system. In the event of a medical emergency while traveling abroad, the cost of moving you to treatment in a nearby region or transporting you back to the United States once stable can be especially expensive.

Cancelled Trip

Even though you may have spent months planning your trip, things don’t always go as planned. If you must cancel a trip unexpectedly, a travel insurance plan can potentially reimburse you for much of the non-refundable prepaid costs if the trip is cancelled for a covered reason. If covered, these costs might include expenses such as non-refundable airline tickets, hotels, vacation rentals, tours, cruises, or transportation reservations. Covered reasons may include the following:  traveler or family member experiences a serious illness or injury or job loss, or the destination experiences a terror event or natural disaster, etc.

Flight Delays and Lost Luggage

Even if your travel plans are not cancelled, schedule delays are certainly a possibility and can be a significant and costly inconvenience. A travel insurance policy may cover expenses related to these delays, such as airline rebooking fees, and any meals, accommodations, and transportation needed should overnight stays be necessary, as well as lost prepaid costs such as missed or unused accommodations or tours at your destination.

And, if you have traveled a lot in the past, you may have experienced that dreaded moment when your luggage did not show up at the terminal. Travel insurance may also cover expenses related to lost or stolen luggage during your trip.

Help in a Time of Need

Even if you are a seasoned traveler or returning to a well-known destination, it is nice to have some support when you need it. Travel insurance plans can offer 24/7 support to you if you are in a situation where a mishap in your plans or an emergency occurs. And if you end up not having to use your purchased insurance, at least you had the peace of mind knowing that if you needed it, it was there.

The Cons

The are few cons to consider when evaluating travel insurance.

The primary disadvantage of travel insurance is the cost of the plan. If you end up not using your purchased insurance (which is actually a good thing), you basically paid for nothing (except that peace of mind already mentioned). Like all insurance, you are buying coverage in case something happens and it is most likely that “that something” will not. Travel insurance can be expensive, and it is more expensive depending on your age. Also, it will most likely not cover a pre-existing condition. So, if you dislocated your knee last year and then once again during that guided hike on your trip, it is likely travel insurance will not cover the expense of treatment on the trip. Also, not everything is sufficiently covered. If your bag is stolen, with your cell phone, luxury watch, and computer in it, your policy may only cover up to a certain dollar amount per item stolen (best to leave those items home regardless).

Talk to Modera Before You Plan Your Next Trip

We support our clients by helping address every aspect of their financial lives, including their insurance situation. As you think about your next trip, get in touch with your Modera team. Not only can we assist with coordinating efforts with various insurance specialists to help ensure you have the level of protection that makes sense for you, but we would also love to hear about your upcoming plans. Safe travels!

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