August 12th, 2019
Your tickets are booked, your bags are packed and all that’s left to do is count down the days until you head off on that dream trip you’ve been looking forward to. If you worked with a travel agent in planning your trip, it’s likely that you were offered the option to purchase travel insurance. While many experienced travelers will automatically choose to select a policy, not everyone is aware of the potential value of this extra expense. However, without the security of a travel insurance policy, you may find yourself facing significant out-of-pocket expenses should you experience an unexpected situation.
Imagine you are on a cruise with your family and the next port of call is two days away. Your spouse becomes very sick with a dangerously high fever. While all cruise ships have an infirmary onboard, they may or may not be able to adequately provide care. Depending on the illness, you might be faced with airlifting off the ship to the nearest hospital which may be outside of the United States. The cruise line is not covering the cost of this for you. The significant expense of the medical evacuation, as well as the hospital bills, will be your responsibility.
Or, maybe you have flown to Italy and are traveling with a group on an organized sightseeing tour. You accidentally trip on a curb and break your leg. You’re brought by ambulance to the hospital where you learn that the break is severe and will require surgery and rehab before you are able to travel again. Not only are you facing medical bills, your spouse or travelling companions will need a place to stay as your tour group was scheduled to move onto the next destination and you no longer have a prepaid hotel available in your current location.
Will your health insurance cover your expenses?
It depends on your insurer and the country you are in. According to the U.S. Department of State’s Bureau of Consular Affairs website, https://travel.state.gov/content/travel/en/international-travel/before-you-go/your-health-abroad.html “Although some health insurance companies pay ‘customary and reasonable’ hospital costs abroad, very few pay for your medical evacuation back to the United States. Medical evacuation can cost more than $50,000, depending on your location and medical condition.” It is particularly important to note that people 65 and older on Medicare are only covered within the borders of the United States. While supplemental Medigap policies are available, the coverage provided outside of the U.S. is limited.
Prior to traveling it can be helpful to speak directly with your health insurance carrier as each will have its own guidelines. Additionally, as stated on the Consular Affairs website, “Many foreign medical facilities and providers require cash payment up front and do not accept U.S. insurance plans.” Depending on the plan, a short-term supplemental travel health insurance policy can pay hospitals directly and provide for medical care overseas. Even if you do find that you have some medical coverage provided in countries abroad under your current health insurance policy, that doesn’t begin to account for the costs of an unexpectedly extended stay and alternate return travel arrangements. Costs for prepayments, deductibles and other out-of-pocket expenses can quickly add up into the tens of thousands of dollars or more.
What will travel insurance cover?
While medical evacuation and hospital bills can easily pile up into very large sums, they are not the only expenses you may face. International travel can be costly, and if the unexpected occurs, travel insurance can offset the financial loss you might otherwise incur. According to the U.S. Travel Insurance Association (www.ustia.org/faqs.html) the cost of insurance ranges between 4 to 8% of the total cost of your trip and is based on length of trip, destination and age of policy holder. Policies vary in coverage, but some of the benefits available are:
- Medical Evacuation
- Emergency Medical Coverage
- Lost, Stolen, Damaged or Delayed Baggage Protection
- Reimbursement of Deposit for Cancelled Trips. Illness, natural disaster, death of a family member, and a host of other scenarios can prevent you from being able to travel. Depending on the policy, you may be able to recoup your deposit.
- Trip Interruption. Sometimes you must cut your trip short due to illness or injury. Or there might be a hurricane forcing the evacuation of an island where you are staying.
- 24-hour Emergency Assistance Line. When traveling in a foreign country where there may be a language barrier, this can be a helpful resource to quickly connect you to the services you need.
While there are premium credit cards which offer some form of travel insurance as a benefit to cardholders, it’s important to understand exactly what coverage is provided and under what terms. Each card will have its own specific exclusions and requirements for any travel insurance they may include. You can contact your credit card company to get further information.
As you make plans for your next trip, it’s a good idea to take a closer look at the travel insurance options available to you. You can speak to a travel agent, insurance broker or contact your travel supplier directly. For a small portion of the cost of your vacation, should the unexpected happen, you may find you save yourself thousands of dollars. At the very least, you can enjoy your time away knowing that you’ve given yourself some financial peace of mind.