Monday, September 26, 2022

Is Travel Insurance A Waste Of Money

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Myth: Nothing Will Happen To Me While Traveling

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Truth: There are many perfectly healthy people who travel to foreign locations without incident. However, life is unpredictable, and anything can happen at any time. What if your trip is delayed? What if you need to come home early because a hurricane flooded your house?

While traveling abroad, many things may go wrong such as sickness, injury, a missed flight, natural disasters, unavoidable trip cancellation or passport theft. Moreover, if you are traveling to a location where adequate medical care is not available, emergency medical evacuation may cost from $30,000 to $150,000.

Types Of Insurance That Might Be A Waste Of Money

These insurance products are rarely worth the expense.

At its best, insurance helps protect against events that could send your finances into a death spiral. Crucial products include insurance against serious car crashes, damage to a home and the loss of income due to death or disability.

But many other types of insurance offer little value, or theyre filled with exclusions and caveats.

Following are some potentially dumb insurance buys.

What Exactly Does Travel Insurance Cover

Some insurance carriers or credit card companies use terms like trip protection and trip cancellation interchangeably, but it’s not always the same thing. Flight delay coverage on a credit card refers to just one aspect of traveling that could go wrong, said Nick Ewen, editor-at-large at The Points Guy.

What’s more, the umbrella term travel insurance covers much more. Travel insurance will often include many different protections: trip cancellation coverage when you must cancel a trip before departure for a covered reason, trip delay protection if a flight is delayed by a certain number of hours, baggage coverage if your luggage is delayed, lost or damaged and so on, Ewan added. In same cases, it even includes medical coverage.

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Potential Costs: Time Spent Not Vacationing But Sitting Around An Embassy Or Consulate

A lost or stolen passport can be a huge hassle when youre traveling not to mention the fears of identity theft and the fact that you cant really go anywhere until you get a replacement. What travel insurance can do:

Travel assistance that comes with most travel plans can help connect you with the embassy or consulate, and get you a replacement passport fast.

Nothing beats having a friendly voice on your side whos been through this before.

Travel Insurance: Worth It Or Not

Is travel insurance a waste of money right now?

“If you’re taking a vacation where the only fee is the $100 change fee of the airline, your economic losses if you need to cancel at the last minute will be minimal,” she said. “But other trips are not like that.”

Dan McGinnity, vice president of insurance company Travel Guard, said that such cancellation policies cover everything from blizzards to earthquakes like those in Haiti and Chile.

Travel Guard and most insurance companies offer customers a 24-hour hotline to help deal with disasters. If a flight is missed or an airport closed, these agents try to make other travel arrangements and the insurance covers the additional expense. Hey, it’s often cheaper for the insurance company to pay extra to get you to your destination than to be stuck footing the bill for your entire otherwise-canceled trip.

Those 24-hour hotlines will also typically work with the airlines to help travelers keep track of lost luggage. They can also assist in booking hotels for stranded passengers.

Those policies also typically cover cancellations if you or an immediate family member are sick or if a tour operator goes out of the business. But, as always, read the fine print.

Cancellation insurance costs about 5 to 7 percent of the trip cost, depending on your age, TravelGuard’s McGinnity said. So for a $200 airfare ticket, that would be $10 to $14. For a $3,000 family cruise, it would cost $150 to $210.

McGinnity said travelers need to ask themselves: “How much am I willing to self-insure?”

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What Travel Insurance Can Do:

Travel insurance can help pay hospital and doctor bills if you get sick or injured when youre on the road.

Whats more, Berkshire Hathaway Travel Protection has experts at dealing with overseas medical emergencies. They know how things work and who needs to be paid when.

They literally speak the language.

Travel Insurance Fact #: You Can Compare Travel Insurance Ratings To Help You Make A Good Decision

Before purchasing travel insurance, you might want to check out the ratings of various insurance companies. Your goal should be to purchase from a highly rated company, one that has a track record of paying claims on time and of financial stability.

You can find an insurance companys ratings through an insurance rating organization, such as Standard & Poors or Weiss Ratings.

In addition to travel insurance ratings, youll also want to keep in mind other factors as you compare companies, such as:

  • Benefits included in policy

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But What If You Already Have Credit

Some people think the travel protection they have through their credit card is the same as travel insurance. Not necessarily.

When something goes wrong on a trip, travelers who paid with a credit card can dispute the charges or get some reimbursement for some items they bought with that card and sometimes thats it.

But Why Is Car Insurance A Legal Requirement

Warning about travel insurance for cruises

Good question its basically all about liability! In other words, your responsibility for any damage caused.

Even though you can take out optional collision and comprehensive coverage to keep your vehicle safe, the mandatory coverage is bodily injury and damage to property.

Both of these give financial relief to the victims of any damage caused by you in an accident.

In New Hampshire, you can get away without this coverage as long as you can prove youre able to pay for damages that you could cause.

Although, its worth mentioning here that its wise to take out insurance anyway!

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Myth: If My Flight Is Delayed The Airline Will Cover Me

Truth: In most countries, including the United States, you are not entitled to any compensation, meals or lodging expenses from an airline if your flight is delayed due to reasons beyond the airline’s control such as inclement weather, air traffic delays or mechanical issues. The most an airline can do is get you to your destination when the next flight is available.

Travel insurance, on the other hand, covers meals and hotel rooms if your trip is delayed beyond certain duration.

When You Don’t Need It

Consider your vacation an investment. Would you be OK losing that money? On a whole, if you’re spending a relatively small sum on your trip, insuring that investment is probably not worth it.

  • Skip It: For U.S. travel

Traveling to Florida? Road-tripping around the American Southwest? You can probably skip any extra insurance. Travel within the U.S. is typically a less expensive investment and most people tend to plan only a few weeks in advance. ValuePenguin estimates the average domestic trip spans about four days and costs $576 per person.

Plus, if you have medical insurance, you’re typically covered for any emergencies that occur. As always, double check the fine print, but experts generally recommend opting out of trip insurance for short trips within the U.S.

  • Skip It: If your card offers it

Check your wallet before buying any travel insurance, since some credit cards actually offer it as a perk. For example, the Chase Sapphire Preferred credit card offers built-in trip interruption insurance that reimburses up to $10,000 per person if your trip is cancelled or cut short because of situations such as an illness or severe weather. The Citi Prestige and Citi ThankYou Premier cards also offer baggage and trip cancellation protection.

So even if you are traveling outside the U.S., if your credit card’s coverage is thorough, you won’t need to purchase anything extra.

  • Skip It: For flights
  • Skip It: Just for flexibility

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If You Can Afford To Lose Your Pre

If you can afford to lose the money, skip the insurance.

As stated above, travel insurance is best used when your pre-paid and non-refundable expenses are more than you are willing to lose.

If you only have a few hundred dollars at risk, you can afford to self-insure this risk.

This is called self insuring because you are taking on the risk of loss instead of passing the risk to the insurance company.

Does Travel Insurance Have Disability Coverage

Is Travel Insurance a Waste of Money?

Yes, some travel insurance companies do have coverage for disabilities and pre-existing conditions, but not all. Disability travel insurance is not included in policies by default and in the majority of cases, disabled people will have to pay more to get the additional coverage they need.

You can find coverage for the following instances :

  • Medical treatment related to your disability/pre-existing condition.
  • Loss or damage of disability and mobility equipment.
  • Replacement of essential medication.
  • Replacement of an essential carer.

In the end, it really comes down on a case-by-case basis and you have to contact a travel insurance company to discuss how your disability fits into their policies.

The coverage for physical disability changes depending on the type of disability it is and whether it is stable.

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So I Should Buy Cancel For Any Reason Right

Travelers who wanted to cancel trips as Covid-19 gathered steam, but before travel was shut off by governments across the globe, were often told that their travel insurance did not cover canceling out of fear unless they had purchased a cancel for any reason insurance upgrade, or C.F.A.R.

With C.F.A.R., a traveler is able to back out any time until a few days before departure and get some money back, usually 50 to 75 percent. Its more expensive than regular travel insurance and must be purchased within a short window after making the initial trip deposit, usually less than 21 days. Additionally, the policy only covers cancellations up to two or three days before the trip.

Using Travel Guards website, I priced insurance on a $10,000 trip to France. Its basic policy costs about $500 to insure. But to get C.F.A.R., I would have to take the preferred policy at about $554. Adding the C.F.A.R. option offering 50 percent back, cost $128, for a total of $682. If I canceled because of the pandemic, or for any other reason, I would only get $5,000 back, half of the insured amount. Less the premium, thats $4,318 net.

Cancel for any reason, Mr. Birnbaum said, is treated as insurance, but its not really. Insurance is protection against some fortuitous event. This policy, he said, covers a decision thats in your control such as changing your mind about taking a trip not a risk thats out of your control, like a car accident.

How To Get Travel Insurance

If you are planning to buy travel insurance we highly recommend WorldNomads. They cover emergency overseas medical treatment, evacuation transportation, trip cancellation, death and dismemberment, and lost or stolen items. Weve met several travelers on the road who experienced medical mishaps and had overseas travel insurance with WorldNomads. Every single one was thrilled with the coverage, customer service, and reimbursement process.

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Is Travel Medical Insurance A Good Investment Or A Waste Of Money

Ive been thinking about travel insurance a lot lately. My position in the past was: travel insurance is a scam. Well not exactly a scam, but a waste of money. Sure, I have read the horror stories of the person who broke a leg on vacation and was so happy to have medical insurance in Italy. Or even worse The Perfect Predator, a fascinating story about a man who is diagnosed with a horrible drug-resistant infection while traveling with his wife. They were very happy to have travel insurance.

Im actually a big fan of health insurance. So theres no reason I shouldnt want to have medical insurance while traveling. For me there are two general categories of travel insurance:

  • Coverage for trip cancellation, lost baggage, and accidents that prevent you from traveling
  • Travel medical insurance
  • The first one is sad, but your potential loss is limited. In the case of a trip cancelation you cant lose more than you spent on the trip. So its an easy calculation of value. Most of my trips are pretty cheap. Home Exchanges, award flights, things I could cancel in case of a disaster, or just lose a small amount of money. Paying to insure these things is a waste of my money.

    Travel Insurance: Is It Worth It

    Is travel insurance worth it?

    When Covid-19 hit, travel insurance didnt help many travelers recover the cost of their canceled trips. What, then, were they paying for?

    Through the travel insurance broker, Suzanne Tow of New York City paid $270 to cover a $5,000 trip in May to Yosemite National Park. When the tour was canceled, Ms. Tow filed a claim with her insurer, and discovered, like so many other travelers, that travel insurance doesnt cover cancellations because of a pandemic.

    Theyre not risking a penny because theyre not paying a cent, she said.

    Americans spent nearly $3.8 billion on travel protection in 2018, the latest figure available, up about 41 percent from 2016, according to the U.S. Travel Insurance Association. Now, for those contemplating traveling in an increasingly uncertain world, the question of whether travel insurance is worth buying looms large. If insurance couldnt help with that first wave of Covid-related travel cancellations, many irate travelers ask, what exactly were they paying for?

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    Myth: My Existing Insurance Will Cover Me

    Truth: Many people mistakenly believe that their existing domestic health insurance, homeowner’s insurance, or insurance through their credit card will cover them, making additional travel insurance unnecessary to purchase.

    The truth is such coverages are very limited in what they cover before or during your trip. Travel insurance generally covers trip cancellation, trip interruption, emergency medical coverage, lost luggage, baggage delay, emergency medical evacuation, repatriation of remains and other incidents.

    Even if your domestic health insurance provides coverage abroad, all services would be considered out of network and subject to a much higher deductible, coinsurance and out of pocket pay.

    Medevac: The Fine Print

    Most medevac policies Ive seen call for transport to either the nearest appropriate medical facility or back to the U.S., depending on the circumstances. Typically, that means you start at a local or regional hospital. The insurance pays for transport back to the U.S. only when, in the opinion of the attending physician, local/regional facilities are inadequate.

    When you need medevac, the insurance company calls all the shots. That means you must, from the beginning, make all arrangements through the insurance company or its local agents. If you jump the gun and make your own arrangements, chances are the insurance company wont cover them.

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    Travel Insurance And Death

    We apologize for bringing up such a bleak subject and we promise, we arent trying to be morbid. To be perfectly frank though, no one knows when the Grimm Reaper is going to show up at our doorstep. Every once in a while he pays a visit when were on vacation.

    If youre unfortunate to meet your maker while in Bali, for example, and your family has to ship your body back home to say their final goodbyes, the financial burden will be considerable. However, most travel incurable policies include a death or dismemberment clause, so youre familys burden wont be as great if you have it.

    What Activities Are Covered By Travel Insurance

    Is travel insurance a waste of money â or essential for ...

    Every travel company has its own policy rules regarding what they will offer coverage for. However, in most cases, travel insurers will offer coverage if you get into an accident doing one of the following activities:

    • Swimming

    Even the following activities may be covered by some insurers under certain circumstances:

    • Skiing
    • Scuba diving
    • Abseiling and rock climbing
    • Sailing
    • White water rafting
    • Bungee jumping

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    Collision Coverage On An Old Car

    The collision portion of your auto insurance policy pays for repairing or replacing your car after a crash.

    Older cars lose value fast. That means the premium costs for collision coverage might not be worth it if your car is especially old.

    Do not, however, drop your auto liability insurance. That coverage generally is mandated by law. If you hit someone else, youll need it to pay the other drivers costs.

    Alternative: Take the amount you normally would spend on collision coverage premiums and put it into a savings account to help pay for your next car. Stop by our Solutions Center to find a savings account with a great rate.

    Insurance Audit: 3 Steps

    Our philosophy is this â you should always buy the minimum amount of insurance you need to sleep well at night.

    Doing that will save you hundreds, if not thousands of dollars, over the course of a year because some insurance is a waste of money.

    So hereâs the question: Are you ready to start saving?

    If youâd like to cut your insurance costs right away, here is a 3 step process to do just that.

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    Some Insurance Is A Waste Of Money

    By following this 3-step process, youâll be in the best position to stop spending money on unnecessary insurance and put it toward your savings or your emergency fund.

    And remember in the future that not all insurance is necessary â only obtain the insurance that you specifically have a need for.

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