Daniel Durazo, head of communications at Allianz Travel Insurance, likes to tell the story of a friend of his who, despite traveling extensively, had never bothered to purchase health insurance for a trip.
Yet Durazo convinced his friend to buy insurance for a recent trip to Panama. While there, his friend was hospitalized with a collapsed lung. “We monitored his care from the U.S., learned that he needed an operation, and air ambulanced him to Miami, where he was treated,” Durazo said. The emergency care in Panama and transport to the States racked up a $30,000 tab; then there was the U.S. care. “We paid it all, because of $129 policy,” Durazo added.
When planning a fantastic vacation, no one wants to think of all the things that could go wrong, but, especially as we age, it’s important to keep these things in mind.
“Most people think of travel insurance as trip cancellation coverage and not much more than that,” says Stan Sandberg, co-founder of insurance comparison website TravelInsurance.com. “But for Baby Boomers it’s the medical coverage that often winds up coming in handy.”
Of course, buying the right policy can be tricky. Here are four things retirees should know about buying travel coverage.
1. Travel insurance costs more as you get older.
The primary factors in pricing travel insurance are the cost of the trip, the amount of coverage you buy and the age of the person buying insurance, according to Durazo. Cost goes up as you get older, with rates beginning to climb at 50. The priciest age group to insure is 80 and up.
The type of trip you are taking -– a cruise, a hotel stay, a group tour ― doesn’t matter nearly as much as the total cost of the trip that you would want reimbursed if it’s cancelled, Durazo says.
There are also limits to how much policies will reimburse for costs related to lost or delayed luggage or trip delays, how much they will cover for hospitalization or medical evacuation, and whether you want to be able to cancel for one reason or a slew of reasons. Basically, the more coverage you want, the higher the premium cost. But if something really does go wrong, the higher coverage can be worth it.
2. It can be more worthwhile.
While trip cancellation might be the reason people buy insurance, experts say the most common claims are for smaller things, such as the costs related to lost or delayed luggage, trip delays and missed connections.
For example, when Sandberg flew to Costa Rica with his family, they arrived on time, but the bag that had everyone’s bathing suits, flip flops and sunscreen didn’t. “It was the bag that, if it was the only one that arrived, we would have been fine,” he recalls. Flights were infrequent so it was going to take a few days for the bag to catch up with them. But his travel insurance included up to $500 per person for delayed luggage. “We went to a local convenience store for new bathing suits, flip flops, sunscreen. It was a few hundred dollars and it made what could have been stressful no big deal,” he recalls.
More exotic coverage, like medical evacuation, is not claimed as often, but it’s probably the feature travelers are most glad to have if they need it. Medical evacuation starts at $20,000 and can easily rise about $50,000, according to Durazo.
“It’s also more complex than people realize,” says Tullia Marcolongo, Executive Director of the International Association for Medical Assistance to Travellers. “Sometimes it’s a matter of getting you to a nearby city or country that has better care than the place you’re in. You might need a visa for that country or need to find air and ground crews and get cleared for landing. I’ve seen it take as long as two weeks.” An insurer doesn’t just cover the costs, she says, they also have local people who know how to arrange it all.
3. It can pick up were your health insurance leaves off.
Sandberg buys private insurance through his state exchange. “I always assumed that when I travel internationally the in-network requirement is waived because obviously I’m out-of-network,” he says. But a closer look at his policy made him realize that “short of life-or-death emergency care, my health insurance doesn’t travel overseas with me.”
Medicare, he says, does not follow you overseas at all. Private insurance might provide coverage for emergencies overseas, but not non-emergency urgent situations, like a sprained ankle or an infection requiring antibiotics. Even within in the U.S., once you leave your state you’re probably out of network, depending on your insurance plan and how far its network reaches.
This is where travel insurance steps in. “Travel insurance is meant to cover the unforeseeable medical problems that pop up,” says Joe Watts, Vice President of HMA Worldwide, Holmes Murphy & Associates, a corporate insurance broker. That could be a low-level urgent situation like strep throat or locating a doctor and local pharmacy to refill a lost prescription.
It also covers more urgent situations, of course. “I saw a claim where a customer thought he was having a stroke,” says Sandberg. It turned out to be extreme dehydration and fatigue from travel, enough to put the customer in the hospital and cancel the rest of his trip. His travel insurance covered both the medical expenses and changed travel plans.
Watts points at that some health insurers will let you buy an extension for travel, but even if they do, travel insurance might be the better option because carriers are in the business of facilitating care overseas. A health insurer won’t know the local health care system and will expect you to pay up front and get reimbursed.
In contrast, the big travel insurers have offices throughout the world and keep lists of doctors, clinics and hospitals that meet their standards. They can help you find suitable care, get a translator if you need it, and “cover the hospital bills directly, so you don’t have to flip out your AmEx to get treated,” says Watts.
4. Details matter.
Of course to get all of this coverage you need to buy the right policy in the right way. Travel policies typically exclude coverage for existing medical conditions, so you need to ask to have that exclusion waived if need be. It’s not hard to do, Sandberg says, but you have to follow the rules.
Most importantly, even if the trip is not for a while, you have to be fit to travel at the time you buy the insurance. And you have to buy insurance within 7 to 21 days of putting down any money at all for a trip, Sandberge explains. So if you book airfare a year ahead and then wait to book a hotel you need to buy insurance when you buy the airfare rather than when the whole trip is booked.
“They put these requirements in to prevent people from buying travel insurance to cover medical tourism, and to prevent a situation where people buy insurance just before a trip because a health issue has come up,” he says. Additionally, you have to buy enough cancellation insurance to cover the full cost of your trip.
Marcolongo says that anyone over 50 might be asked to fill out a medical form when applying. “Look at it carefully because medical terminology can differ from one insurer to another, and consider having your doctor fill it out,” she says. “If you leave anything off, even by accident, or this form doesn’t sync with the form you fill out at a hospital or doctor’s office, it can be a reason to deny coverage or reduce it.” If a form only allows for yes or no answers, she says, “remember that health issues are more nuanced than that; don’t be afraid to attach another page explaining a health issue in more detail if you feel the yes or no doesn’t tell the whole story.”
If you buy the policy far in advance, you might have purchased only part of your trip, say the cruise but not the flight to your port city. Marcolongo and Durazo advise updating your insurer as your plans evolve, and also if there are any changes to your health, even though it might increase the cost of your policy. “If you buy coverage for a trip far in advance, you can make a best estimate of what the total trip will include and you can change your policy as you go,” Durazo says.
Eileen Gunn is a travel journalist and the founder of FamiliesGo!, a family travel website.