Protecting Your Travel Investment

| October 3, 2018 | 0 Comments

A lot of Baby Boomers have been retiring recently, and a good many of them have spent that extra time travelling. For some, that has meant hopping in a recreational vehicle and roaming the highways and byways of the Continental United States. For others, that has meant jetting off to destinations they didn’t have time to see while working.

There’s a lot that goes into planning that big trip, not least of which can be a significant investment in time and money. Travelers are often left wondering if they should insure that investment, in case something goes wrong. Travel insurance can offset the cost of your trip if you end up having to cancel it for some reason, and typically costs around five to 10 percent of the cost of the covered travel. Like any insurance policy, knowing the details is important.
Here are five things to look for when insuring your travel abroad:

Options.
Are you buying your insurance from a travel agent or from an insurance broker? If it’s the former, you may not have many options to pick from. InsureMyTrip.com and SquareMouth.com give you far more choices for coverage and cost.

Does it cover medical expenses?
Most U.S. health insurance plans will cover life-threatening situations, but there are important nuances so you should contact your carrier to understand the details. Medicare, for example, won’t cover you outside the U.S., but your Medicare supplement plan might. If your plan doesn’t provide sufficient coverage, or you plan to be gone more than a few days or weeks, you may want to consider purchasing a dedicated travel health insurance plan. In any event, you should be prepared to pay for medical care up front and be reimbursed later.

Does it cover medical evacuations?
Here in the United States, we generally take good health care for granted. If you become seriously ill or are injured while traveling, your regular medical insurance may not cover the cost of getting you home, or at even to better care nearby. If you’re doing serious adventure travel (deep in back-country areas or well off the beaten path), this is critical. Even if you’re travelling in Europe, the cost of returning home with nursing and support equipment is significant. Some medical insurers will only pay for life and death evacuation. According to Consumer Reports, medical evacuation can range from $20,000 to $250,000 so it’s definitely worth insuring, even if it doesn’t happen very often. If your regular medical insurance doesn’t cover this expense, make sure that your travel insurance does.

Does your insurance cover pre-existing conditions?
Many travel insurance policies will not cover travel interruptions or cancellation from known medical conditions. How this is defined will depend on the policy you purchase. You may be able to obtain a waiver by purchasing your travel insurance within a few days of your first purchase for your trip.

Are you paying for unnecessary coverage?
The cost of replacing a bag of clothes and some toothpaste probably doesn’t justify the price of insuring it. And benefits for accidental death due to accidents like a plane crash is going to be very expensive compared to the likelihood of something happening.

Just buying the insurance isn’t enough. If you actually have to use it, you may have to fight to get your expenses covered. Make sure to keep your receipts and document your expenses. This is especially true of medical expenses incurred overseas.

Remember that this is insurance. The best insurance policy is the one you never have to use. But the high cost of travel makes it worth considering, especially for medical needs on the road. If you’re wondering whether the benefits of travel insurance are worth the cost, ask yourself how much you’re willing to lose if the trip goes sour. Travel insurance for a $500 domestic trip might not be worth the expense, but what about a two-week European vacation or an African safari? Definitely.

This column is prepared by Rick Brooks, CFA®, CFP®. Brooks is director of investment management with Blankinship & Foster, LLC, a wealth advisory firm specializing in comprehensive financial planning and investment management. Brooks can be reached at (858) 755-5166, or by email at rbrooks@bfadvisors.com. Brooks and his family live in Mission Hills.

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