Many do not realize the need for travel insurance until it’s too late. If a reservation is lost, a flight is missed or a natural disaster occurs, they can do little else than complain to the airline, hotel, or travel agent. Without travel insurance, there is little guarantee of compensation for your ruined vacation plans.
What is travel insurance?
Travel insurance is designed to financially protect your travel plans in a variety of ways.
Events that could hinder your travel plans can vary:
- Having to cancel your trip due to an immediate emergency.
- Missing a connecting flight.
- Weather event causes damage to your destination.
- Lost or delayed baggage.
- Getting ill during your trip.
- You lose important documents such as your ID or passport.
In all these instances, without protection, you could be out the entire cost of your vacation or completely stranded. Lucky for travelers, travel insurance is quite affordable.
Average cost of travel insurance
Travel insurance is not a one-size-fits-all. Many factors will determine the cost of your policy:
The age of those traveling
Age is the most crucial factor in determining the cost of your travel insurance policy. Those over the age of 65 pay more, while those who are minors can often be included at no additional cost. This, of course, varies by company.
How many will be traveling?
The more people you choose to cover will increase the cost of your insurance.
How long is your trip?
Risk is the reason insurance exists. The longer you are on your journey, the more risk you pose to the insurance company. The more days you are on vacation, the costlier your policy will be.
Type of coverage selected
Optional benefits will increase your premium. You pick and choose your policy coverage based on your needs and how much you are willing to pay for protection.
The average cost of travel insurance for an individual for a basic, no-frills policy is $105. A multi-tier comprehensive policy can cost, on average, up to $164 (based on a single traveler up to the age of 30). After 30, the price tends to increase about $20 up to the age of 60. Beyond 60, a basic policy can cost up to $160-$200.
Average cost of travel insurance for a family
As you add family members to your travel insurance policy, the cost increases. It is wise to budget between five and seven percent of the cost of your trip.
If your trip costs your $5,000, you should expect your insurance to cost around $250. This figure will vary by insurance carrier. Therefore, it is essential to shop around and see which companies offer the best policy with the most coverage.
What does travel insurance cover?
You’ll find that when you book a vacation package, a portion of that deposit that is non-refundable. Even if you have a valid excuse for having to cancel your trip, you lose that portion, which can sometimes be substantial.
With travel insurance, you would be able to recuperate some, if not all, of that prepaid, non-refundable deposit you made to your agent. Insurers may also offer a “cancel for any reason” upgrade to a standard policy if it is purchased well enough in advance of your trip. This benefit will cost extra, but it would help should you have to cancel at the last minute.
There are times when you need to cancel your trip before you board a plane or cast out from port. There are other times that you do make it to your destination, only to have an emergency back home warrant you to cut your trip short. Travel insurance will help pay the expenses needed to return you home to deal with your emergency.
Emergency medical expenses
No one likes to think that he or she will get ill during a week away from home. However, if a situation arises where you find yourself sick or injured, travel insurance will provide the necessary funds to seek medical treatment.
A health insurance policy in most cases will not cover you if you are in a foreign country. If it does, then the coinsurance is often higher and will cause you additional out-of-pocket expenses. Travel insurance will assist in bridging the gap.
Emergency medical evacuation
This benefit, like emergency medical expenses, provides the funds for you to seek medical treatment, only it goes a step further. It will pay for transportation to the nearest medical facility that provides adequate medical care.
There is also a benefit called repatriation for the unfortunate event of a death on your trip that would pay the expenses to send your remains back home.
Accidental death and dismemberment
This coverage would apply if you were to pass away or lose any limbs in an accident during your trip.
A fear every flyer has is that an airline will lose his or her luggage, and if that does happen, you may have to go shopping to replace your wardrobe. Travel insurance can cover:
- Lost checked-in luggage
- Baggage delays
- Expenses incurred due to lost luggage
- Pay for reimbursement of lost items
Other benefits will vary by policy and company. These can include emergency cash transfer, ID theft protection, rental car coverage or flight accident.
What it doesn't cover
There are some circumstances in which a travel insurance policy will not cover. It is up to the insurer whether they will cover a particular claim, but some of the common exclusions are:
Leaving your luggage unattended or your valuables lying around your hotel room and not in a secured location could cost you a denied claim.
Unapproved medical condition
Just as with a life insurance policy, if you were to file a claim due to an unreported illness, or you are waiting for test results of a condition, your claim will most likely be turned down.
A claim can be rejected for engaging in reckless behavior, including:
- Excessive drinking
- Taking recreational drugs
- Engaging in high-risk sports or activities
- Disobeying traffic laws
If you chose to travel to an area that the government of the country you are visiting suggests that you not visit, your policy could be void.
Changing your mind
There are circumstances where you would need to cancel your trip. Simply changing your mind about travel is not one of them. Neither is neglecting to get the appropriate paperwork, such as a passport, within the proper time.
Best travel insurance companies
Many insurance companies offer travel insurance. Some are life insurance companies while others specialize in the travel industry. It is wise to do your homework when it comes to trusting your trip to a company.
Allianz Global Assistance
Allianz is the largest travel insurance company and is owned by Allianz SE, the world’s largest diversified insurance company. They provide services worldwide and partner with thousands of travel agencies, airlines, resorts, websites, and credit card companies. Founded in 1983, Allianz has a Insurer’s Better Business Bureau rating of A+ and is trusted by more than 35 million travelers a year.
Allianz offers a variety of plans, including policies designed for domestic and international travel. For a 42-year-old male traveling internationally for a week on a trip cost of $2,500, a basic policy will cost $96. This will cover most circumstances; the difference between this plan and the premier plan that costs $176 is the coverage amounts.
A family of four traveling internationally for a week on a $5,000 trip would pay $158 for a Prime policy and $214 for a Premier policy. Note that Allianz Prime family policy is less expensive than its basic policy at $204. Therefore, it is important to shop around for your travel insurance. Allianz offers special packages for certain customer classes.
Amex gets its name from its parent company, American Express. You do not have to be a card member to purchase travel insurance from Amex Assurance. This company has been in business since 1850 and has an Insurer’s BBB Rating of A. They offer four plans: Basic, Silver, Gold, and Platinum. The same 42-year-old male traveling internationally for a week on a $2,500 trip would cost $59 for the Basic and $224 for the Platinum policy. The Basic is less expensive than Allianz, but the coverage is not as extensive.
A family of four traveling internationally for a week on a $5,000 trip would pay $236 for a Basic policy and $631 for a Platinum policy. One of the benefits of the Platinum policy is that for a trip interruption the payout can be up to 150% of the trip cost. The medical protection offers up to $100,000 on the platinum policy, while the Allianz Premier offers only $50,000. Once again, shop around for what is important to you to have covered.
Generali Global Assistance
Generali Global Assistance has been active since 1991. However, the parent company, Europ Assistance Group, has been around since 1963. They have an Insurer’s BBB Rating of A+ and assisted over 300 Million customers in 2016. They have a presence in over 60 countries around the world.
They offer three plans: Standard, Preferred, and Premium. Using the same information, we used for the previous quotes, 42-year-old male, traveling internationally, trip cost of $2,500, a Standard policy would cost $86. The Premium plan costs $115. It’s by far the least expensive of the three for the top-tier policy. Coverage seems to be the best of the three as well. For instance, trip interruption on the premium policy is 175% of the trip cost, compared to only 150% on the other two insurers quoted above.
For a family with the same criteria as in our previous examples, the Standard policy would cost $180, and the Premium policy would cost $243. Coverages for a family are similar to the individual policy in that they are superior to the coverages provided by both Allianz and Amex. However, if baggage is your concern, Generali only provides $2,000 on its premier package when others offer more.
Remember, shop around for what is important to you.
The buyer should read all policy statements in full. Be aware of coverage amounts, limitations, and exclusions as these will vary by policy and company. This is crucial, especially when you are comparison shopping. There are reasons why one company is less expensive than the other; oftentimes the reasons lie in the limitations.
Travel insurance can be purchased for a single trip, multiple trips, or annually. If you are a frequent flyer, selecting an annual policy could be the most cost-effective route to protecting yourself when you travel.
Travel insurance is not just for vacationers. Perhaps your job requires you to travel for business, or you are a student who travels home for the holidays. These instances could warrant a multi-trip or annual policy. Most insurance companies have special riders that focus on the needs of frequent travelers.
Another recommendation when you travel is to register your trip with the State Department’s Travel Registry website. In the event of a family emergency or another type of crisis, they can contact the traveler if he or she is registered.