Travel Insurance 101

By Damon Poeter

A vacation is pretty much always a guaranteed fun time. But what if you land in Chicago and your luggage winds up in Charlotte? Trip insurance often gets overlooked since it seems like an unnecessary cost, but it can be a lifesaver.

Losing a suitcase is one thing, but you’ll definitely be happier having trip insurance if there’s a medical emergency –  like if your child’s appendix bursts on a trek through the Grand Canyon and she needs to be airlifted out. All policies are different, but some companies offer coverage for a variety of smaller setbacks, ranging from a missed flight connection to a last-minute trip cancellation to even unplanned hospital stays. 

How Travel Insurance Can Help
Suppose you miss your connecting flight from New York to Paris and there won’t be another flight available for a day or more. Suddenly, you’re out of pocket for hotel accommodations you hadn’t planned on. Perhaps you’d been planning this trip for months, budgeting very carefully to have enough funds. A last-minute expense like a pricey stay in New York could put a dent in those plans.

A good travel insurance policy may cover such unplanned setbacks. Most claim settlements are paid out within four to six weeks, and industry researchers report around nine out of 10 travel insurance claims are accepted.

“From a financial planning perspective, it just makes sense to buy travel insurance,” says Sean Scaturro, a CERTIFIED FINANCIAL PLANNER™ practitioner and USAA’s director of life and health insurance advice.

Depending on your travel insurance plan, you may be compensated for a host of things that can go wrong, such as a delay in getting your baggage or even a last-minute need to cancel the trip entirely.

Types of Travel Insurance
The most important thing to know is that travelers can explore four main categories of coverage  that meet different needs:

  • Package plans
  • Travel medical plans
  • Evacuation plans
  • Accident plans

Package plans are often generically called “trip insurance,” “vacation insurance” or “travel insurance” because they provide the most comprehensive coverage for a variety of problems that might arise on a trip. A good package plan may cover:

  • Trip cancellations
  • Trip interruptions
  • Cancellations for any reason (optional)
  • Baggage loss
  • Baggage delays
  • Travel delays
  • Medical expenses (incl. pre-existing condition coverage)
  • Evacuations
  • Accidents

Package plans are great for cruises, vacations and business trips because they’re so comprehensive. Some plans extend the coverage for things like medical expenses to your children. USAA’s plans are unique in offering military members coverage if they must cancel a trip for deployment or reassignment. Keep in mind that if you don’t opt for cancel for any reason (CFAR) coverage, you’ll have restrictions on the reasons you can use for a trip cancellation claim.

Travel medical plans offer most of the coverage categories that package plans do except for trip cancellation and the CFAR option. They also generally offer less compensation than package plans for trip interruptions. It’s a good idea to select a travel medical plan if you’re very unlikely to cancel a trip and want to save a bit of money on the policy.

Evacuation plans typically cover only the medical expenses you might incur on a trip and provide accident and medical evacuation coverage. Things like flight delays and lost luggage aren’t covered under these plans, and the plans themselves are accordingly less expensive. Such plans are best suited for travelers who’ll be staying in their destination for an extended period, like a student spending a semester abroad or a person on a long-term foreign work project.

That’s because they’re more affordable than other options that cover things like baggage delays, which aren’t an issue for the majority of long-term travelers’ trips. If you’re headed for a long stay away from home,  ask your trip insurance agent about combining a package plan for your travel days with an evacuation plan for the bulk of your trip.

Accident plans are essentially evacuation plans without the built-in coverage for medivac emergencies, though some accident plans offer evacuation coverage as an option.

With all of the above plans, noninsurance travel assistance is also generally included. For example, USAA’s Travel Insured International plans provide policyholders with 24/7 customer service that includes medical and legal referral, hospital admission guarantees, and emergency assistance and evacuation assistance.

“From a financial planning perspective, it just makes sense to buy travel insurance,” says Sean Scaturro, a CERTIFIED FINANCIAL PLANNER™ practitioner and USAA’s director of life and health insurance advice. 

USAA members receive an automatic discount when buying travel insurance through USAA partner Travel Insured International. Learn more here.

 

Alliance Services provided through USAA Alliance Services, LLC.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.

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Tags - Insurance, Travel

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