When the person selling you some travel service asks "Do you want insurance?" it is almost as enticing as when you hear "Do you want fries with that?" at the drive-through window of your favorite fast-food chain. The natural response is "Why not?"
The question ought to be "Do you NEED insurance?" To be a smart insurance buyer, look at everything that could be covered and pick what matters to you. Then decide how likely each one is to happen and whether you can afford to cover the cost if it does. Once you see the price to insure against it, compare that to the peace of mind the insurance will bring. That exercise will help you buy only what you need and not what someone wants to sell you. (And then you probably should buy it from an insurance company.)
Risk. Insurance is all about risk, and as we age, we tend to become a little more risk-averse. That shift is understandable because we are probably no longer in our income-generating phase of life, and are less able to recuperate from a large financial loss. So, whether we're going to visit the grandchildren a plane ride away or taking that lifelong dream trip to Tuscany, we want to think of where we are exposed to major expenses or losses.
Travel insurance has expanded to cover many different elements, from medical expenses to financial losses, and on to simple inconveniences. Where it works a bit differently for seniors than it does for younger people is in medical coverage: many of us already have Medicare (and its extensions) covering most of our medical risk within the U.S. Some Medicare Supplement and Advantage plans even give us partial coverage overseas. For medical coverage, we want to look for any gaps that leave us exposed.
However, we need to know that travel insurance is not as easy to use as our Medicare plans, where we show a card, and we're covered. Often, we will need to pay for medical expenses while overseas and then file a claim for reimbursement. Some plans may arrange for advance payment if needed for you to gain admission to a hospital. 'Primary' coverage plans, which we explain further down, are more likely to do this.
For non-medical aspects of travel insurance, we first want to see where we already have coverage through our accumulation of credit cards, different memberships and other insurance policies like life, health, auto and homeowners. Again, if we feel we want to protect against certain things, we should only buy travel insurance to fill those gaps.
We need to remember that travel insurance is about money. Not experiences. Depending on the policy we buy, it can recover non-refundable prepayments we make in travel fares, lodging or tours. It can also pick up unexpected medical emergency expenses if we have carefully avoided any 'pre-existing medical condition' traps in the fine print of our policy. But travel insurance cannot rescue a ruined trip. All it can do is put money back in our bank accounts so we can afford to plan a similar trip all over again.
As we age, the joy that comes from experiences seems to grow. To the extent that travel insurance gives us a second shot at an experience, buying it smartly makes sense.
Travel insurance also makes sense where exposure to high medical expenses could be devastating to our long-term financial planning. It's one thing to fill in the gaps in our traditional medical coverage. But, when we are traveling to foreign countries or remote locations in the U.S., we also need to think of the costs involved in reaching the medical facilities that can provide the medical care we require. Medical-evacuation services (referred to as 'Medevac' policies) are what pay such costs.
Regardless what form of evacuation is needed, whether an emergency plane ride home or a private airplane outfitted with life-saving equipment, it is all expensive. Most Medevac policies are secondary, which means you pay up front and then file a claim for reimbursement after any other insurances pay their part. If possible, look for a Medevac policy that is 'primary,' especially one where the insurance company also pays the bills up front as long as you follow their rules and instructions. One last suggestion: such coverage often limits what it considers 'covered reasons,' and excludes pre-existing medical conditions unless waivers are in place, so you need to read the fine print.
Buying travel insurance is complicated. The lists of available coverages are endless, and possible exclusions are woven throughout the fine print of policies. Regardless, once we decide we want to invest in travel insurance, our initial concerns are pretty typical: the cost of the policy, the ease of purchase, available coverage, timing and access to the insurer's customer service.
We also want to know about communications tools (like mobile apps), how claims are handled, guarantees, age restrictions and pre-existing conditions.
A few basic guidelines stand out as you look at travel insurance companies. First, go for a big-name company with deep pockets, rather than a company you have never heard of, so you have no risk of the company not being there when you need them.
Next, if possible, find a company that offers 'primary' insurance instead of 'secondary' insurance. That means the company pays the claim first, without making you exhaust all other possible insurers you have before it pays. With secondary coverage, you will eventually get paid; it just may take longer.
Then look to see if the company offers special plans for seniors. Such a company may have thought through the fact that Medicare, with a Medicare Supplement or Advantage plan, would already cover certain medical situations, and offer a more cost-effective medical program that complements your existing coverage. Unfortunately, few companies do. Most will market (heavily) to seniors, but won't have senior-specific, focused plans.
In the plans themselves, you should look for age limits high enough to cover your age. The plans should offer ways to obtain waivers that cover pre-existing conditions effectively. Coverages should include a minimum of $50,000 for medical expenses and offer Accidental Death and Dismemberment coverage (unless you have separate life insurance). Ideally, you want the option of choosing your hospital, even if that means evacuation.
Two areas differentiate what seniors prioritize from what other people do: age friendliness and health-related value.
With age friendliness, the older we get, the more we want to be shielded from unpleasant surprises. Surprises will happen during travel nonetheless. The question is how well the insurer deals with them. For example, will the company's 24/7 emergency service help you get the medications that disappeared when your luggage was stolen so you can continue your trip? Will the insurer get the money back that you prepaid for the cruise that was canceled? Can you call on the company for travel advice, foreign language assistance or legal advice? You want to know just how 'friendly' the company's customer service really is.
Travel insurance is not age friendly. Many major companies will quote based on your age and, unless you pay high premiums, it might be necessary for you to give up the waivers on pre-existing conditions. And the few policies that are not age rated tend to have a maximum age. On the other hand, those "Travel Supplier Waiver Plans" offered by your cruise line or tour operator are usually not age rated, so they may be your only real choice if you are in your 70s or older. However, do not confuse these waiver plans with 'regular' insurance; these are not regulated by your state's Insurance Licensing Department and offer minimal real protection.
As for the health-related value of travel insurance, it increases as your health condition declines. The more pre-existing conditions you have, the more you need to be certain you have qualified for coverage exclusion waivers. You need to know exactly what to do to avoid having a claim denied because you missed a purchasing deadline or ignored the insurer's claims instructions, for example.
Access to effective and affordable medical evacuations also grows in importance as your possible need for them increases. You want to know you can reach a medical facility that can provide the medical care you need.
Travel insurance premiums are based on the age of the traveler; the type of coverage; and the cost, destination and duration of the trip. Premiums typically range anywhere from 5 to 12 percent of the trip's cost, but rates increase dramatically for every decade above age 50.
According to the website Value Penguin, a study of average travel insurance premiums showed they increased by 19 percent from age 30 to 50, but by 24 percent from 50 to 60 and 23 percent from 60 to 70. From 70 to 80, they took the greatest leap, increasing by 71 percent, then back to a 24-percent increase from 80 to 90.
More than two-thirds of policies are sold by tour operators, travel agencies and cruise line representatives who are highly motivated by the commissions they can collect. However, this is the worst way for you to buy travel insurance. First, they are not experts in travel insurance and may be selling an unregulated product. Second, they are more interested in pushing the plan that gives them the greatest commission, not necessarily the best one for you. And, most important, if the company itself goes belly up, your policy is worthless.
Something may be better than nothing, you say. But try not to have any illusions. Reading the fine print, you may see just how restrictive the coverage is, or just how little you will receive: sometimes just a partial credit on a cruise ship or destination where you already had an unpleasant experience.
Many experts recommend that you buy directly from reputable insurance companies or indirectly through independent online agencies (comparison websites) that specialize in travel insurance after you have defined what coverages you want and after you have visited the sites of recommended insurance companies to understand what is available. The premium should be the same, whether you buy direct or indirect.
The independent online agencies typically have search systems that allow you to enter personal details such as your age, trip details and the coverages that interest you. Because they represent multiple insurance companies, their systems can display all the policies that meet your criteria, together with the prices. Using more than one such online agency increases your chances of finding the very best package.
Wherever you do buy, with a quote in hand you will pay with a credit card and receive an email that gives you your purchase confirmation and the plan documents for the insurance you chose. If you haven't read the documents carefully before buying, read them now while you still have time to get a refund and buy something else.
'When' you buy your insurance is important. Experts recommend buying it soon after you make the first payment on any part of your trip. That way you avoid hitting the greatest number of cutoff dates after which claims for travel company bankruptcies, pre-existing medical conditions or catastrophic events (terrorist, hurricane or earthquake, for example) could be denied. A 'Cancel for Any Reason' rider will remove most exposure to denials, but it is extremely expensive (often adding 40 percent to the premium) and usually only reimburses partially.
Buying bundles, or comprehensive plans, may lower the costs as long as they contain what you want to buy and not a lot of unneeded extras. Some bundled policies may not be age-rated and may be less expensive because the costs of claims are shared with younger policyholders. The older you are, the more you will have to hunt for plans that make the cost of important coverages affordable.
If you are a frequent traveler, especially if you travel abroad often, consider a multi-trip annual policy. That strategy could save you a lot on the cost of coverage.
One last detail: available policies and premiums, even from the same insurance provider, can vary from state to state.
The initial evaluation criteria in buying travel insurance include the cost (premiums), ease of enrollment, what is covered, when the policy goes into effect and how easy it is to access customer support.
Cost: Once you have identified what coverage you want from your travel insurance policy, a premium will be determined. That premium will be due immediately, although your trip may not start right away.
Ease of enrollment: Identifying the exact policy you want to purchase is complicated enough. The actual purchase of a travel insurance policy should not be difficult. The more ways a company lets you do so, the better. Being able to purchase online and by phone are the bare minimum.
Coverage: A travel insurance policy can cover many different aspects of travel. The most common ones are trip cancellation/interruption, emergency medical care, medical evacuation/repatriation, baggage/personal item loss and delay and 24/7 worldwide assistance. Your chosen company most likely offers many comprehensive plans that include different combinations of those elements, plus many add-on riders. Some companies may offer 'Medical Only' policies as well. A company will ideally offer 'primary' emergency medical coverage of at least $50,000 and $100,000 for evacuation.
Waiting period: Policies go into effect immediately regarding any changes in health conditions considered pre-existing, or if the trip is canceled, for example. However, the true coverage begins the day your trip begins.
Customer support: Good customer support can be measured by how many ways you can interact with the insurance company, the hours their non-emergency customer support is available and the existence of 24/7 emergency support. If you have to make any changes, report an incident or get emergency help, the company needs to be a quick click or call away.
Today we want to use our smartphones for most everything, so we want to know if the insurance company offers a mobile app. We also want to know how fast the company handles claims, especially if we have 'secondary' insurance and all other coverage we have (such as through policies like homeowners insurance) needs to be exhausted first.
A company worth its salt will offer you at least a 10-day looking period in case you don't like what you read in the fine print of the contract. It should then return your full premium when you cancel. (Some will take a small processing fee for their trouble.) The greatest risk is that you may have missed the 7-21 day window--counted from when you made the first payment on your trip--if you don't act quickly. Staying within that window determines if you qualify for a waiver on pre-existing health conditions, among other things.
Age restrictions are serious barriers for seniors; they can 'age out' of viable insurance. The older you are, the higher the premiums and the less the insurance companies are willing to cover. You may eventually be pushed into accepting your cruise line owner's or tour operator's less-than-stellar 'insurance' package. But first look carefully at whatever other insurance you have through credit cards and other policies like homeowners, Medicare, etc., to see if you want to pay them for such limited coverage.
Lastly, you want to examine what is required to qualify for coverage for pre-existing conditions. Every insurer handles them differently and creates a virtual obstacle course for you to master if you ever submit a claim.
With travel insurance coverage (and most any other kind of insurance coverage), the devil is in the details—more specifically, the fine print. Even before you commit to purchasing a policy, get a copy of the travel insurance plan certificate and read it. Understand all the policy exclusions and coverage limits. Look for optional riders that cover your specific circumstances, including any high-risk activities. Only then can you be confident that you are buying the right policy with realistic expectations.