Why do I need Travel Insurance?

Traveling in another country for Americans can seem daunting, but one thing most people don’t think about is Travel insurance, or if they do they consider only Travel Interruption Insurance.  But if you are going to travel to another country you really need to consider health insurance.  Most of the world provides health insurance to their residents and citizens, some even provide it to anyone in the country, but there are countries that will bill you for services performed even if those would be covered for their citizens.  In this post I explain the two main types of insurance considered travel insurance, why you may want to get both or neither and how they differ.

What is Travel Insurance?

There are two main types of travel insurance, trip interruption insurance and travel health insurance.  Travel interruption insurance covers the cost of your trip if something happens and you can’t make the trip or you need to cut your trip short for some reason.  Travel health insurance provides health insurance during your trip, there are two types of health insurance, plans for those on trips shorter then 30 to 60 days and plans for those who will be away from their home country for long periods of time, typically over 90 days.  Each type of insurance has their benefits and limitations which I will explain below.  You need to make your own choice on what type of insurance makes sense for you and your trip and spend accordingly.  This post is not meant to endorse or steer you into a decision but to help you make an informed decision that best meets your needs.

Travel Interruption Insurance

This type of insurance is often offered if you book a trip with an online travel agent, think Expedia, Travelocity, etc.  It may also be offered through your credit card for all or a portion of your trip, and it can be purchased separately within a certain number of days of booking your trip via a third party.
This is often marketed as can’t go insurance,  You will get all or a portion of costs back if you can’t go on your trip or if you have to leave your trip early.  Basically this insurance will pay you back for your costs if you break your leg two days before the trip or catch the flu and can’t go.  It will also pay you back for the last week of your trip because you tripped on a curb and broke your arm and shoulder and need to fly home.  It will also pay for transport back if you need to get home because your great aunt passed away while you were on the train to Osaka.  This insurance usually doesn’t cover medical costs, so while it will get you home after you broke your arm, it doesn’t cover the hospital ER costs, the ambulance, or the x-rays.
I recommend this insurance if you are buying a package tour or buying everything up front and there is a chance you won’t be able to make your trip or will need to leave early.  Make sure you read what is and isn’t covered with this.  I have seen some offerings where if you got sick or injured more then 3 weeks before your scheduled departure or arrival dates you only got a portion of your trip reimbursed, I believe it was 60%.  Most also don’t cover cancellations due to your job so keep that in mind.  Also if you have a travel credit card or an airline rewards credit card and use that to book your trip you may get some level of travel insurance with it.
I have bought this in the past for trips I wasn’t 100% sure I was going to be able to use.  I’ve never had to use it but the piece of mind was nice.
I typically don’t buy this insurance anymore with the way that I travel.  I don’t buy a lot of excursions or transportation tickets until I am in country.  I buy my airline tickets with an airline branded credit card which covers refunds if I can’t make a trip, and I only ever get hotel rooms for the first few days in country so my initial outlay for a trip is low and I’m not out a lot if I need to cancel a trip.
However, if I was taking a tour where the company was planning everything I would most definitely consider and buy this insurance just to  protect me from the tour operator going out of business or some other issue.  I do buy this insurance when the amount of money I have tied up into a trip is more then I’m willing to risk losing if something were to happen.

Travel Health Insurance

This insurance is health insurance for use outside your home country.  It covers all of the up front costs of getting medical care and medicine and will bill you for your deductible.  This insurance isn’t really needed if you are travelling to countries that offer medical care to all, like some European countries do.  However, I would still consider it as they offer coverage to get you home if you are sick including having medical staff fly with you if needed.
Most of the major health insurance companies in the us offer short term international medical insurance and some offer ex-pat medical insurance.  For our trip to Japan I paid $26 per person for our medical insurance.  I actually got it while in country as I forgot to buy it before we left.  We almost needed to use it as my wife got sick near the end of out trip but she got better right as we were considering going to the doctor.  
The way the insurance I’ve purchased works is that if I need to go to the doctor or hospital I simply present them with a document in English and the native language explaining that my insurance company will cover the costs of coverage and there is an in country phone number for them to call to verify coverage and handle the billing.  I then get treated and when I return I am sent a bill for any agreed upon co-pay.
I typically start looking at this insurance from the same company that I have health insurance through in the US as they have my records and can provide them to the in country provider if needed.  But I do shop around and if I find something cheaper I consider buying it instead.
When looking for Travel health insurance make sure you get either short term insurance (for a few weeks) or ex-pat insurance (for years being out of country).  Most companies sell both and if you buy the wrong one it won’t cover you.

Recommendations

My personal recommendation is to buy health insurance that covers the countries you will be travelling in, and to not buy trip interruption insurance.  The one caveat is if you are booking a tour or spending more then you are comfortable losing then buy trip interruption insurance to hedge your risk.
Cheers,
Dave…
 

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