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Travel Insurance: “To Buy or Not to Buy…” That Is the Real Question

When it comes to taking a vacation, travelers often face a number of decisions that involve risks. Cruises filled with travelers from diverse areas flock together and head to warmer climates when influenza is at a peak back home.  Hurricane season can threaten the sandy coastlines when families are heading into summer vacation.  Still, excited holiday plans move forward without hesitation.

You may be brave and willing to face many obstacles for that long-awaited holiday, but there is one risk that you most likely cannot afford to take: you simply should not skip the travel insurance.

travel plan

The International Travel and Health Insurance Journal cautions that travelers who ignore the insurance issue altogether or leave it to a last-minute decision risk losing most of the funds for their vacation. In a recent post, the journal cited a survey by the Allianz Global Assistance UK, which found that one in five travellers either purchase travel insurance at the last minute or not at all.

The 20% that declines the insurance may feel reasonably safe living on the edge. “After all,” they reason, “there have been no family emergencies in the past months. Everyone is basically healthy, and the cost of the premium could better be enjoyed in the marketplace!”. Some even go as far as to wait until the final moments before a trip to purchase tickets. They shop for bargain packages and skip the insurance. But the unforeseen does occasionally happen. Last-minute illness or a death in the family can cancel a trip with little or no reimbursement.

The remaining 80% that do opt for insurance need to be sure to do so in the proper time frame.  If a last-minute hospitalization or a death in the family threatens vacation plans, a traveller may rush out and grab an insurance policy, then cancel the trip and hope for a refund.  Sadly, pre-existing situations are not covered in such cases.

So, even though the odds are normally with you, and even though pocketing that premium is tempting, the fact is that purchasing trip insurance and doing so at the time of the reservation are wise choices.  Let’s look at a few reasons for this.

 Why and when to buy
In the article linked above, Paul Doran, Head of Travel Operations at Allianz Global Assistance in the UK, says that an injury, a serious illness and the death of a loved-one are the top reasons for last-minute cancellation of travel plans. Other reasons for the purchase of insurance include the accidental death benefit during the actual trip, emergency evacuation (as during hurricane season), and paying for health care abroad.  These costs can be staggering! However, gambling on waiting until the day of the departure doesn’t always work.  Most policies have a 24-48 hour waiting period.  So, if you purchase insurance on the day of your trip, it may not go into effect until the day after, and your travels to your destination won’t be covered by the insurance.

So, is the timing of the insurance purchase really an important issue?  It definitely is. If you must cancel your trip, disappointment over the loss of the vacation itself is heart-breaking.   However, paying for a percentage of a trip you couldn’t even take breaks the wallet as well. Such a disappointing experience could possibly spell the end of risking pre-arranged travel in the future.  The fact is purchasing insurance at the time of the reservation is no more costly than a last-minute policy.  The risks of ignoring the need, however, are painfully high!

Perhaps the real issue is which type to buy
Clearly, waiting until the last minute to buy the insurance does not have a cost advantage.    It does, however, bring certain built-in restrictions on the type of coverage that will be available. Basic Trip Cancellation insurance is for specific unforeseeable problems such as a death in the family or your own hospitalization.  A claim may require documentation by a professional such as your doctor for verification.

Other types of insurance are available which will allow you to cancel your trip for any reason at all – any reason. Having a family pet that becomes suddenly ill and requires your attention, for example, can be an area that is covered by such insurance.  However, it may not always cover 100% of your costs.  In fact, you may stand to lose 50-80% of the non-refundable fees. These other insurances may come with a time restriction as well, so last-minute purchasing does little good.

So then, what is the best policy for protecting your investment in a future trip?   Get the insurance, and do it when the reservation is first made.  Any other plan is a gamble that could ruin your holiday altogether.

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