After years of waiting and delays, many retirees are planning to travel for the holidays and winter months.
Booking in advance can be a great way to secure lower prices, but how can you protect your travel investment? Travel insurance is part of the answer and there are several ways to book travel that can mean less risk if you change.
Those who had travel plans for 2020 and 2021 that they booked before the pandemic know very well the disappointment of not being able to travel until, in some cases, this year, or even 2023.
Whether you buy travel insurance depends on how risky you are, how much the trip costs, and how much you’re willing to pay for travel insurance.
If travelers spend an average of $5,500 on a two-way trip, they’re buying travel insurance, said Megan Moncrief, chief marketing officer for SquareMouth.com, a travel insurance aggregator website. The total dollar amount of travel has been “fairly consistent,” but has dropped slightly since the pandemic.
“Travel insurance has grown in popularity and demand,” Moncrief said. Travelers want to book deals “but they want extra protection.”
Travel insurance typically costs 4% to 10% of the total cost of the trip, according to Moncrief, and insurance policies vary so it’s best to consider your needs carefully.
Read: When to buy travel insurance and when to leave it
Air travel has declined to a certain extent this year, according to data from the Transportation Security Administration, comparing travel figures for August 16, 2019 with the same dates for 2020, 2021, and 2022. The figure for 2022 is 1.99 million compared to 2.25 million tourists for 2019. For 2021, 1.61 million tourists came through TSA while in 2020, only 566,000 were inspected.
The cruise industry has come back but more slowly. More than 75% of ocean liner capacity has resumed service, and nearly 100% are expected to be in operation by August 2022, according to the Cruise Lines International Association, the industry’s trade association. Some cruise lines are sailing at full capacity while others are gradually increasing capacity from the 50% capacity restrictions imposed earlier in the pandemic.
Janet, who is in her mid-70s, booked a long-awaited Norwegian cruise in 2019, and she and her husband still haven’t taken the trip, in part, because they are reluctant to travel abroad this year.
The trip was originally planned for June 2020. That year, “the cruise line canceled everything,” Janet said, so they rebooked to travel in 2021. The cruise company said the couple would receive either all money or a coupon for 2021 with a credit for 125 % travel. They can use the extra credit to upgrade their cabin or apply it toward the cost of a beach excursion. “We took 125% and rebooked for 2021.”
However, in 2021 they are reluctant to travel. Since they have two years to use the voucher, they decided to reschedule for 2022. Still hesitant to go abroad for fear of missing out if they contract COVID-19, they are booked for 2023 at 125%.
They have purchased travel insurance from a third party insurance company as their trip also includes pre-cruise travel and post-cruise travel. Insurance cost them $1,400 for a $20,000 trip, about 7% of the total cost, and the cost was reasonable for them. “We just want to be safe,” Janet said.
Since they stopped their trip, the insurance company gave them a full refund for the insurance. In the meantime, they have vouchers for a cruise in 2023, and need to re-evaluate whether to purchase insurance for the entire trip.
Although the couple still have two years to take the cruise, they are determined to go in 2023. “I’m going next year,” Janet said. The reason: “Let’s go back. We still have health.”
For travel insurance from a separate insurance company, the couple decided on a “superior” insurance, she said, because they wanted to protect their travel expenses as well as get strong evacuation coverage. “We know we want to book (it) if we want to be flown home,” if they get sick.
The current trend is for travelers to purchase cancellation coverage, medical coverage, and travel delay insurance, Moncrief said. Cancellation coverage provides reimbursement for prepaid and nonrefundable trip payments if your trip is canceled due to illness, injury or death as well as bad weather, being needed for work or if you lose your job. Travel delay coverage reimburses the cost of meals and accommodation if your trip is delayed.
However, if you want more coverage that allows you to cancel for reasons such as your fear of contracting COVID-19, experts advise buying additional coverage that includes “cancel for any reason.
If you are “scared, uncomfortable (traveling), or the border is closed,” you usually won’t be covered by travel insurance that covers you for trip cancellation, travel disruption, or medical coverage. “The anxiety aspect of COVID is not covered under standard cancellation” insurance, Moncrief said. “Cancel for any reason is a much broader coverage.”
It usually increases the cost of your insurance by about 40%. Furthermore, “cancellation for any reason” coverage typically reimburses up to 75% of the cost of your trip.
Travel insurance typically includes trip cancellation and post-departure benefits, says Syed Rizvi, head of specialty insurance, Nationwide. “The bigger cost is the trip cancellation deduction,” he said.
His estimate for the cost of travel insurance is 2% to 4% of the cost of the trip. Trip cancellation coverage includes payment of prepaid, non-refundable fees if you cancel your trip for a covered reason. Post-departure benefits include medical, evacuation, lost baggage, and travel delay coverage. It is possible to purchase evacuation insurance separately but not all companies offer it as a separate purchase.
When you buy travel insurance, most often you’re buying what’s known as secondary insurance or “excess insurance,” which means secondary insurance to other insurance you already have, experts say.
That means the travel insurance company will check what insurance you have first, insurance that will cover, for example, medical. However, if Medicare is your primary health insurance coverage, it does not cover you when traveling outside the US. . When planning a trip abroad, it’s a good idea to check what medical coverage you have when deciding what type of travel insurance you need. Also, check your credit card to see what type of travel insurance, if any, is included. Cards that include more extensive coverage typically have a higher annual fee.
If you buy a primary emergency medical benefit, it means that the travel insurance company is the first to pay or reimburse you for that benefit, rather than switching to other health insurance you have, said Daniel Durazo, director of external communications at Allianz Partners USA.
With post-departure benefits, how much coverage is required varies. “It’s really a personal decision,” said Erma Crock, senior director of product management, operations, and underwriting for Specialty Nationwide.
Consider how healthy you are, the type of travel you do during the activity and how much you weigh, if you’re on Medicare, and whether you’re only traveling in the US or internationally as well as on cruises that include US and international ports. “It depends on where you’re going and the type of travel you’re doing,” Crock said. “Most (travel insurance) policies take into account what the average person needs,” he says.
For example, most have $1 million in evacuation coverage and $250,000 to $500,000 in medical benefits, he said. Check the fine print to see what policies you are considering including. Some evacuation coverage may be lower, so decide if you want more coverage before you buy.
If you want to make sure you’re covered for pre-existing conditions that may arise before your trip, buy travel insurance within 10 to 14 days of paying your deposit, Crock says, or buy it at the time you make the deposit. surely you will be covered. .
How will you know if your deposit/down payment will be refundable or not? “Before you save a vacation deposit, be sure to pay attention or ask what the terms and conditions say about canceling and getting your money back,” says Allianz Partners USA’s Durazo. “Since the beginning of the pandemic, many travel companies have increased the transparency of non-refundable fees, especially for online bookings, ensuring that the terms of the booking are in a strategic place that customers will not lose sight of during the checkout process.”
If you see a good deal for travel in December, January or February, a deposit can get you a price that won’t be available later.
If you are concerned you can change your mind, the deposit is refundable until a certain date in the fall, after which the penalty for canceling will begin. Instead of booking online, speak to someone over the phone, whether it’s a travel company representative or an independent travel advisor who can explain your options. Another way to protect the deposit is to buy a refundable trip which will cost you a little more but still keep your deposit refundable until the specified date. Not everyone buys travel insurance but people who like the security do.
“When something happens, you wish you had it,” SquareMouth.com’s Moncrief said.
