I’ve been thinking about travel insurance a lot lately. My position in the past was: travel insurance is a scam. Well not exactly a scam, but a waste of money. Sure, I have read the horror stories of the person who broke a leg on vacation and was so happy to have medical insurance in Italy. Or even worse The Perfect Predator, a fascinating story about a man who is diagnosed with a horrible drug-resistant infection while traveling with his wife. They were very happy to have travel insurance.
I’m actually a big fan of health insurance. So there’s no reason I shouldn’t want to have medical insurance while traveling. For me there are two general categories of travel insurance:
- Coverage for trip cancellation, lost baggage, and accidents that prevent you from traveling
- Travel medical insurance
The first one is sad, but your potential loss is limited. In the case of a trip cancelation you can’t lose more than you spent on the trip. So it’s an easy calculation of value. Most of my trips are pretty cheap. Home Exchanges, award flights, things I could cancel in case of a disaster, or just lose a small amount of money. Paying to insure these things is a waste of my money.
Medical expense risks
But medical care is a potentially huge expense. As demonstrated in the book I mentioned above, there is basically no limit. And medical evacuation alone is super expensive. But, temper that with the reality that most countries have better and cheaper health care than my home country (the United States). In most cases I think I’m better off getting treatment while traveling. My likely expenses for things like an injury or illness aren’t very high in most destinations. However, there are a few risky situations:
- Engaging in higher risk sports like scuba diving, rock climbing, mountain climbing, etc.
- Traveling in remote parts of the world where specialized medical care isn’t readily accessible
In these cases, in the past, I have purchased travel medical insurance. I’ve never used it, thankfully. But on a one-trip basis it’s not that expensive. And the cost-benefit analysis makes sense to me.
But as I get older perhaps I get more risk averse. And my health care insurance coverage overall will likely a step down soon. So I did a deep dive on travel health insurance options.
Credit card insurance
Some credit cards offer really good travel insurance. Here’s a list of coverage you can find on various credit cards:
- Trip cancellation and interruption
- Auto rental collision damage
- Baggage delay
- Trip delay
- Roadside assistance
- Lost luggage
- Travel accident insurance
- Emergency evacuation
- Emergency medical and dental
I value all of these, but the most important ones that people are likely to pay extra for are the trip cancellation and interruption, auto rental insurance, and the emergency medical coverage. But it’s well worth knowing which credit cards cover trip delays and lost luggage too. That can save money and smooth over bumps in your travels.
This credit card insurance generally covers you and your family when you book the trip for them. The key is to book your trip with the right card.
The trip cancellation and interruption coverage is now offered by a lot of cards including:
- All of the Chase premium credit cards (generally those with an annual fee)
- Many Amex premium credit cards
- The Bank of American Premium Rewards card
- A few Barclays cards
I’m purposely not listing the individual cards here. Not all coverage is equal; I encourage you to look at the benefits of your cards closely. You need to book the travel with the card in order to invoke the insurance.
There’s currently only one card out there that I know of that offers emergency medical and emergency evacuation insurance: the Chase Sapphire Reserve. It comes with a hefty $550 annual fee (really $250 since you get $300 back in travel credits). It gives you up to $2500 for medical expenses and up to $100,000 for medical evacuation.
Insurance from your personal health plan
Some health plans cover you internationally. And some workplaces offer international health coverage as an added benefit. If you work for a large corporation it’s worth looking in to this before spending money on extra insurance. Unfortunately, in my experience, these additional benefits often don’t extend to family members.
Buying travel insurance from a third party
Since I get all my non-medical coverage from credit cards, I’m mainly hunting for a good deal on the health insurance side of things. Better than the $250 for the Chase Sapphire Reserve coverage.
There are a lot of companies offering various types of travel insurance. It’s apparently a profitable business. That should tell you something about the odds of needing to actually use this insurance. They are making a profit. You are paying for peace of mind. Most of the time you aren’t actually paying for services. (For which you should be thankful).
I got a quick online quote from Allianz, a major company in this business. Comparing these two options, the differences are in coverage of trip delay and cancellation. Since I don’t care about that, the relevant plan is $135 for the year. That covers $20k in emergency medical care and $100k for evacuation.
Seven Corners quotes me $235 for an annual plan with up to 45 days per trip. That includes $1M medical and $1M in evacuation coverage. And it would even cover some services within the United States. There is a limit to coverage for pre-existing conditions, though it doesn’t seem very restrictive in my case. For an extra $35 I can get coverage for hazardous sports. This means for $270 I can have excellent travel medical and evacuation coverage with a lot of extras.
I found this Forbes article comparing various travel insurance companies which also links to the author’s consumer advocacy website for reviews and complaints of the various companies. And here’s a link to a list of companies that provide annual plans.
IMG offers comprehensive annual health insurance, but for a LOT more.
Raising my deductible to $2500 didn’t bring these costs down much. And there is a hefty additional charge to cover evacuation. However, I think this is comprehensive enough to be considered primary medical insurance for someone who spends a lot of time traveling. So that’s a different scenario altogether.
The bottom line: there are a lot of ways to get medical insurance while you travel. I’m probably going to buy an annual plan but I haven’t picked the winner yet. If you’ve got experience with travel medical insurance let me know what plan you recommend.
Travelling alone from London home to Sydney, half an hour before my flight was leaving, I was suddenly overcome by a gastric upset which was so bad I couldn’t fly. I was attended by the (Gatwick) airport paramedic and taken to a nearby hotel. The following morning when the gastric Upset had subsided I contacted the airline to rebook on the next available flight, which was the next evening. They required a doctor’s certificate saying I was able to fly. I had to organise a second night’s accommodation and find a doctor to examine me and give me the certificate. This involved two taxi rides – for the first one I forgot to ask for a receipt so that was not claimable on my travel insurance.
When I arrived home I contacted the insurance company which paid out the full $1400 by which I was out of pocket. This covered the rebooked flight, doctor’s fee, accommodation and taxi (minus the $200 excess).
So your insurance needs to cover medical costs as well as cancellation and rebooking onward travel.
I would never travel without insurance! This was the first time ever that I’d made a claim in years of international and domestic travel and the cost of insurance is well worth it.
Thanks for sharing this Gara. I’m so glad you got paid by your travel insurance for that awful experience. But I think your case raises some really good financial questions. If that’s (hopefully) the only time you need the insurance, I’m guessing that you will come out losing money. The average cost of travel insurance is $111 (https://www.businessinsider.com/personal-finance/average-cost-travel-insurance), so if you take more than 12 trips, you’ll pay out more than you got back for this one medical issue. That’s the likely scenario, which is why travel insurance is a profitable business. For me it’s still a question of risk tolerance and your ability to seek and pay for care wherever you’re traveling.