Our Thoughts

International Travel: Covering the What-Ifs

By: Laurie Belew 

Do you have the travel bug? 

I do! I caught it right after college when I joined a tour group on a European adventure. As my uncle likes to joke, we saw 237 countries in five days, and it was amazing! He exaggerates, of course. I got to sample 12 countries – mainly by bus – over 30 days. That experience gave me an appreciation for how much there is to see in the world. 

And I’m not alone. More than 40% of U.S. citizens hold passports, and according to the National Travel and Tourism Office, some 93 million of them traveled outside U.S. borders in 2018. 

Fast forward almost 20 years (!) after my European adventure, and I still love to explore. There was my U.S. city phase (Boston, Chicago, New York, and San Francisco are my faves); the island phase (Jamaica, Bermuda, and St. Lucia, to name a few); and more recently, the national park phase (Denali, Yellowstone, and The Grand Tetons so far).

If you’re also an explorer who considers traveling a priority for a happy life, read on for tips to stay as secure, sound, and money-savvy as possible on your international excursions. In Part 1 of our two-part series, we help you sort through your travel insurance options. 

Is Travel Insurance Worth the Price? 

International travel often comes at considerable cost. The Los Angeles Times reported in 2016 that overseas trips could be five times more expensive than domestic travel.  

That’s why Americans spent $3.8 billion in 2018 on all types of travel protection, according to the U.S. Travel Insurance Association (UStiA). That amount represents a 40% increase from 2016. The association reports that trip cancellation/interruption benefits account for almost 90% of travel protection purchased in 2018, with medical and medical evacuation benefits accounting for another 6.3%. 

What are the most frequent claims made by travelers? Squaremouth, a travel insurance company, breaks down claims for 2016: 

  • 31% medical benefits 
  • 27% trip cancellation 
  • 16% trip interruption 
  • 16% travel delay 
  •  9% baggage loss/delay 

Travel insurance is not cheap. Expect to spend an amount equal to 4%-10% of your trip. But also consider this—UStiA found that one in six Americans (17%) say their travel plans have been impacted by medical conditions, natural disasters, or mechanical/carrier-caused glitches. Need a little help preparing for these types of occurrences? Read our guide on why keeping your finances organized can help when life happens. 

As you weigh whether travel insurance is a good value, the association suggests you ask the following questions: 

  • How much can I afford to lose if I must forfeit all or part of my vacation? 
  • What if I become ill or get injured while traveling? 
  • Will my airline, hotel, tour company, and other providers refund my money if adverse circumstances force me to cancel my trip at the last minute? 

When you investigate your travel insurance options, explore these three key areas. 

Coverage for Medical Care 

  • UStiA warns that your health insurance plan may not cover charges for medical services abroad. Medicare plans do not pay for such care (although your Medigap plan might), and neither do most credit cards. Check your policy carefully to avoid both gaps and duplication in coverage. Here are typical services covered in a travel policy: 
  • Emergency physician, hospital, lab, and dental services. 
  • Emergency travel to your location for family members. 
  • Medical evacuation – Transportation to the nearest hospital or back to the United States if necessary. Squaremouth recommends at least $250,000 in coverage. 
  • Return of the remains of a deceased traveler. 

The Centers for Disease Control and Prevention (CDC) recommend that you confirm the following with your insurer: 

  • How the insurer defines an emergency. 
  • Exclusions for injuries related to terrorist attacks, acts of war, natural disasters, exacerbations of pre-existing conditions, and adventure activities such as scuba diving and mountain climbing. 
  • Preauthorization requirements for treatment, hospital admission, and other services. 
  • Deductibles, copays, and limits. 

The International Association for Medical Assistance to Travelers can provide a list of vetted English-speaking doctors and clinics worldwide. You can also contact the local U.S. embassy or consulate for your destination or ask your insurance company for suggestions. 

Coverage for Trip Cancellation/Delay 

Travel insurance with trip cancellation included can cover the prepaid and non-refundable expenses you incur before starting out on your adventure. The most common coverage reasons cited by UStiA are: 

  • Illness, injury, or death of you, a traveling companion, or a family member. 
  • Severe weather that prevents you from reaching your destination. 
  • A terrorist attack at your destination. 

If you’re concerned enough to expand coverage, you can upgrade to “cancel for any reason” coverage, but it can increase your premium by 40%. 

Travel delay insurance kicks in when your flight is delayed, or you miss it for reasons outside your control, such as severe weather, a mechanical breakdown, or an accident on the way to the airport. Travel insurance can cover your meals and hotel accommodations during the delay. 

Coverage for Lost/Stolen/Delayed Luggage 

Your homeowner’s policy does not necessarily cover your belongings when you travel abroad. If not, you may want to consider coverage with traveler’s insurance. 

When your luggage is delayed, insurance can cover your purchase of clothes and other essentials after a typical 12-24-hour waiting period. If your luggage is permanently lost, stolen, or damaged, your policy can reimburse you for lost items up to a typical $250-$500 limit, according to Squaremouth. The company recommends you insure pricier items through your homeowner’s policy. 

Now that you’ve contemplated your insurance needs stay tuned for Part 2 for international travel tips on finances, security, and car rental. 

Meanwhile, if travel is your passion, draw on our expertise at FJY to help create a holistic plan that incorporates your leisure and financial goals to achieve the lifestyle you desire.