Retirees tend to have an abundance of free time, and many spend it traveling. You may travel more during your first few years of retirement than you did during your entire working career. More weeks and months on the road sampling exotic destinations are a big reason that retirees find that they spend more money in retirement than they ever did during their working lives. Traveling also entails risk — of loss or theft, of cancelled itineraries and missed flights, of physical injury and medical evacuations. As the travel industry has evolved, the insurance industry has kept pace, providing an array of products protecting travelers from risk.
There is often a great deal of overlap between various kinds of travel insurance and insurance you may already have. One basic form of insurance sold in kiosks at airports is flight insurance, promising to make a big payout to your family if your plane crashes. This is wholly unnecessary; if you already have a term life insurance policy, you’re covered, not only if your plane goes down (which is as unlikely as your getting struck by lightning) but if you should die for any other reason as well.
To Purchase Travel Insurance
For International Holidays
Travel Health Insurance
Travel health insurance is another matter. See what your current health insurance policy covers; you may already be covered for routine or emergency care in an overseas hospital. (However, you may have to pay the foreign hospital up-front, then submit a claim with your insurer when you return home.) Your current insurer may also be able to cover you for specific trips, if you discuss your travel plans with them beforehand and arrange for an additional premium. However, U.S.-based general health insurers rarely cover for medical evacuation and repatriation. If you’re going trekking in the Himalayas, diving in the South Pacific, or sailing on an extended cruise, you should consider a good travel insurance policy that, should you get hurt, will get you treated and stabilized at your foreign location, then get you flown back to the United States. These kinds of policies are usually sold for an annual premium (around $300) rather than per trip. And read the fine print: are you covered for helicopter evacuation if you break your leg in the mountains? Two good companies offering extensive health insurance for overseas travelers are Travel Guard and Medjet Assist; either of these insurers will fly you back to the medical facility of your choice.
Trip Cancellation and Interruption Insurance
Another common form of travel insurance is trip cancellation and interruption insurance. Whether you need this depends on how much you have outlaid for your trip. If you purchase an air ticket from Phoenix to Las Vegas for $59 and have to cancel at the last minute, your loss will be negligible; don’t bother insuring. However, if you’re putting down several thousand dollars as a deposit for a luxury cruise, then consider cancellation insurance. A family emergency or illness may force you to cancel. Or, the cruise operator may go out of business or simply cancel the cruise, and be unable to refund customer deposits. For this reason, do not purchase cancellation insurance from the airline or cruise operator you’ll be using; purchase from a third party.
Many trip cancellation policies also offer baggage insurance, covering you for lost, damaged, delayed, or stolen luggage. The airlines themselves are liable to some degree for losing or destroying your luggage, but their liability is limited and will rarely reimburse you in full, especially if you’re traveling with valuable clothing or documents. You can supplement baggage insurance through your airline via an option known as “excess valuation,” in which the airline provides up to $5,000 in additional coverage for your baggage at a cost of about a dollar per $100 in value; you can purchase this coverage at the counter when you check in, and you’ll have to describe the contents of your bags. However, a separate baggage insurance policy, tacked onto a trip cancellation policy, is likely to offer better coverage.
Other kinds of travel insurance policies cover specific activities. Travel Guard offers a special policy for golfers, including reimbursement for prepaid green fees if you have to cancel, unexpected course closures, inclement weather, and other unforeseeable events. Your golf equipment, of course, is also covered against loss or damage. If you hit a hole-in-one, Travel Guard will cover up to $250 in the celebration costs you’ll be expected to incur back at the clubhouse.
Adventure travel may not be fully covered by your travel health plan; there may be limits, and you may need to supplement your health coverage, or purchase third-party insurance that covers you for adventure travel (high-altitude climbing, for instance) or extreme sports. Also, if you purchase any kind of travel policy, whether a health policy or trip cancellation policy, read any provisions regarding political events. An act of terrorism or sudden revolution will certainly affect your travel plans, but do such events qualify as causes that would allow you to collect if have to cancel or cut short your trip? Most policies will allow you to cancel a trip beforehand if the U.S. State Department issues a travel warning for your destination, and most will reimburse you if you need cancel because of an act of terrorism in your destination country. However, a suicide bombing in Bombay will not necessarily qualify you for reimbursement for your scheduled trip to Calcutta, because of the considerable distance between those two Indian cities. Also, losses caused directly by war or threat of war are rarely covered. If you are traveling to a volatile area, your travel costs may not be insurable.
Immediately after the September 11, 2001, attack on the United States, Travel Guard reimbursed air travelers who had purchased cancellation insurance who suffered from last-minute anxiety — who were “afraid to fly.” The insurer, to its great credit, felt that the reimbursements were the right thing to do, but it was an immensely costly event for Travel Guard, and it’s unlikely the company would do it again. Traveling, by its very nature, must entail some risk to the traveler. How much of your trip you want to insure is a personal decision, based on an objective cost/benefit analysis and on your own tolerance for risk.