What is travel insurance?
Many different people loosely understand travel insurance to mean many different things. However, travel insurance primarily falls into two broad categories:
- Package plan that includes trip cancellation insurance.
- Package plan that does not include trip cancellation insurance but primarily focuses on travel medical insurance.
What does trip cancellation insurance include?
Trip cancellation insurance is a package policy that includes various items such as:
In case you need to cancel your trip for valid reasons prior to your departure, it will reimburse you the pre paid non-refundable portion of your trip cost.
If you have purchased the travel insurance sufficiently in advance of your trip and very close to your initial trip deposit, many travel insurance plans, most at a higher premium, will let you upgrade to cancel for any reason.
In case you need to return back home from your trip early due to covered reasons such as your house is on fire or flooded or your close relative passed away, it will help you pay for the additional expenses to make arrangements to return home early.
Emergency Medical Expenses:
If you were to get sick or injured while you are on your trip, travel insurance will pay for the expenses. Your domestic health insurance you have may not cover you outside your home country, or may provide limited coverage or it may be subject to higher deductible and higher coinsurance and higher out of pocket maximum.
Emergency Medical Evacuation:
If you were to get sick or injured while on your trip, it would transport you to the nearest medical facility where adequate medical care can be given. Once you are stable enough to travel back home, it may also pay for you to return home under the 'Repatriation' benefit.
Repatriation of Remains:
God forbid, if you were to pass away while on your trip, this benefit would pay to send your remains back home.
Various policies may cover things such as loss of checked luggage, baggage delay up to various amounts. Some policies may just pay for the additional expenses you incur due to the fact that you lost your luggage and pay for reimbursement of those items (up to their stated maximum amount) and ask you to collect the payment from the travel provider (such as airline) because they lost your luggage.
Accidental Death & Dismemberment:
This coverage would apply in case you were to pass away in an accident or were to lose one or two limbs (dismemberment) in an accident.
There may be other benefits such as travel delay, assistance services, emergency cash transfer, concierge services, ID theft protection, rental car coverage, flight accident etc. They may vary among various policies.
What is travel medical insurance?
Travel medical insurance mostly does not include trip cancellation benefit but focuses primarily on medical benefits. It may provide better medical coverage than the trip cancellation insurance would provide. It may not limit the coverage strictly to major emergencies. This type of coverage is generally more suitable for people who are traveling for a longer duration outside their home country.
Many travel medical insurance plans also cover many of the benefits listed above under trip cancellation insurance section.
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Should I really buy travel insurance?
Unlike car insurance, as it is not mandatory to purchase travel insurance, many people think of that as an unnecessary expense. However, if you are traveling away from home, especially outside your home country, medical and/or emergency medical evacuation expenses can be significantly higher. It is extremely difficult for most people to pay $50,000 for emergency medical evacuation. Even if someone has that kind of money handy, it would still be difficult to make the arrangement for evacuation. Let the travel insurance companies handle that for you in such unfortunate events as you would have enough things to worry about.
Many people incorrectly assume that their domestic health insurance, or homeowner's insurance or insurance through credit card company would take care of everything and they don't need additional travel insurance. Make sure to carefully review what they cover so that you are adequately covered.