My wife and I just booked a trip to Spain for September. As this will be my first trip to Europe, it has been quite a learning experience already.
While this blog generally focuses on investing and financial topics, we know that our clients love to travel. We hope you find this informative and helpful.
I’ve learned that many travel experts (as well as my parents!!) highly recommend trip insurance, and significant medical evacuation coverage in particular.
Medical evacuation coverage is recommended in case you are seriously injured while traveling and need to be taken by ambulance, plane, helicopter or other form of transportation to a medical facility, if you then later need to be transported to a better hospital or eventually to a hospital back in the US. Coverage is recommended for $500,000.
I have a premium credit card, which unbeknownst to me, provides very good, but not optimal travel insurance coverage. As I’ll explain, my costly credit card actually saved me more than $1,100 on the travel insurance. If I was older, the savings would have been even greater!
Comprehensive trip insurance for our trip purchased as a separate insurance policy would have cost about $1,200. This would cover trip interruption and cancellation (which would have reimbursed us for the non-refundable tour costs if we couldn’t go because of a medical emergency between the time we booked the tour and the departure date). This would apply to an emergency to me, my wife, any of our immediate family members, such as parents, children or siblings, and even a broader range of relatives. The policy also provides up to $500,000 of medical evacuation costs and other coverages. The policy cost is based on your age and cost of your trip.
My Chase Sapphire Reserve credit card costs $450 per year, but gives $300 in travel credits annually, so the net cost is really only $150. One of the card’s features is a range of trip insurance coverages, including up to $20,000 of trip interruption coverage, similar to what I described in the preceding paragraph. However, they only provide $100,000 of emergency medical evacuation coverage, which is considered inadequate.
Thus, the credit card’s trip insurance coverage was good, but I still needed another policy for emergency medical evacuation.
Through my travel agent for this trip, I contacted an insurance company that provides a range of trip insurance policies. The trip insurance company is a subsidiary of Berkshire Hathaway, which I viewed as quite positive. For only $92, we were able to purchase a policy that has very minimal coverages in most areas, but has $500,000 of medical evacuation coverage and $50,000 of medical benefits. This policy will be the primary insurance and the credit card coverage will be supplemental on top of these benefits.
I recommend that you review your credit cards if you are planning a major trip in the future, especially a cruise, pre-paid tour or trip outside of the US, where your costs are paid up-front and usually non-refundable.
You may find that it is advantageous to obtain a premium credit card with travel insurance coverages and use that credit card to pay for such a trip. That is key, as you must charge the respective trip’s cost on that credit card for their insurance coverage to apply. Even though you may have a hard time paying a $400+ annual credit card fee, it may actually save you many times that amount versus the cost of obtaining full, comprehensive trip insurance on its own. Plus, these premium credit cards have many other benefits, depending on your traveling and other features. See my prior blog post on credit card and travel benefits, 12 Travel and Credit Card Tips for Greater Value and Enjoyment Part 1 and Part 2.
While I’m not advocating any specific credit cards, it appears that the Citi Prestige and Chase Sapphire Reserve credit cards provide broad trip insurance benefits. There may be others as well. Surprisingly, American Express’ Platinum card does not offer trip insurance coverage for interruption, cancellation or medical emergencies, such as medical evacuations.
Please view this as general advice, as trip insurance policies have many details and conditions. You need to pay for the trip/tour/cruise on the card that provides the insurance benefits. You should review your own personal situation, as well as the details of any insurance policy provided via a credit card benefit or a stand-alone trip insurance policy.
If you purchase a separate trip insurance policy, whether for comprehensive coverage or specifically to get evacuation coverage for a trip outside of the US, it needs to be purchased promptly after you book/pay for the travel. In my case, the insurance policy needed to be obtained within 21 days of my initial trip deposit or payment.
For the insurance coverage provided as a credit card benefit, you don’t need to do anything at the time of booking. You only need to contact them when you have an issue that would warrant an insurance claim.
I would also recommend that you bring copies of any of these policies and the respective contact information with you on the trip, as you would need to contact them in case of an issue. It would also be advisable to give the information to a close family member who is not traveling with you. For the medical evacuation coverage, the company needs to be informed immediately and they must approve most expenses in advance.
Now that I’ve learned about this, I will soon be purchasing an additional set of supplemental trip insurance policies, as I’m planning to take my two sons to Greece around Thanksgiving to visit my daughter, who will be studying abroad this fall as part of her junior year in college.
As we often tell our clients, it is important to save and invest, but it is also important to have great experiences and be able to travel while you are healthy and able to do it. I’m thankful and looking forward to be able to go on both of these trips.
Hopefully none of these insurance policies will be needed, but I do feel more secure knowing that I will have them.
We can’t control the future. But we can help you plan to minimize your risks and help you feel more secure.