Listen: What the Heck is Travel Insurance?

Please consult with a qualified professional for any investment or financial advice.
 

Welcome to Play That Back, where we spotlight conversations from our main show that are worth a second look.
 

A lot goes into planning a trip. You’re figuring out flights, hotels, the list goes on. And, once you have it all figured out and paid for, it feels great. But you know what they say about the best laid plans…
 

That's why we wanted to revisit our conversation with travel consultant Mel Miller. She did a deep dive into travel insurance and what it actually covers, when it makes sense to buy it, and how to figure out if you really need it. 
 

Buckle up and get ready for some practical advice to keep in mind when booking your next trip. So enough from me. Let's play that back.
 

Tell me if this sounds familiar. You just booked a flight or maybe a hotel room. And right before you actually check out, a little box pops up asking, do you wanna buy travel insurance? A million zillion people have protected their trips. And then they try to make you second guess yourself with a no thank you button that says something absurd like, I refuse to protect my trip. I live dangerously.
 

I'll admit it. It always makes me pause and wonder, should I actually be buying this? And what even counts as a travel insurance?

So I finally got curious enough to do some research and answer the question that's probably crossed your mind at least once. What the heck is travel insurance?
 

Long story short, it protects the money you can't afford to lose if life interrupts your trip.
 

That's Mel Miller. She's an IATA verified independent travel consultant and adviser. She's helped me wrap my head around a lot of this stuff.

It's really not about expecting something to go wrong. It's about protecting your financial investment if something unexpected happens. Illness, weather disruptions, cancellations, medical emergencies, or even lost luggage.
 

So big picture, travel insurance is basically a bundle of safety nets for two big things, the money you've already paid for your trip and your health and safety while you're away from home. That's the general structure described by the US Travel Insurance Association, and it helped me make sense of why this stuff keeps popping up everywhere.
 

When people regret not purchasing travel insurance, it's usually when something happens after they've already departed. A medical emergency overseas, a family emergency back home that forces an early return, a misconnection that causes them to miss the start of a cruise or a tour. At that point, they're not just losing a deposit, they're dealing with real time expenses in an unfamiliar place often under stress.
 

So one of the first things I wondered was whether travel insurance actually reimburses you if something unexpected forces you to cancel. And spoiler, of course it does, as long as the reason is one the policy specifically lists. It's how most comprehensive plans work according to industry guidance.
 

People say, I've never had to cancel before, and that's really great. But insurance isn't about your track record. It's about that one time something outside your control happens. Healthy people get sick, for example. When someone's on the fence about travel insurance, I always suggest they ask themselves, if I had to cancel tomorrow, would I be financially comfortable losing this entire trip investment?
 

All the stalk of reimbursements and coverage started sounding a lot like good old health insurance jargon. That's when I got curious about the medical part of travel insurance.
 

I always assumed my regular health insurance would just follow me around the world. But the Centers for Disease Control and Prevention makes it clear that many US health plans don't even cover routine care overseas, and Medicare generally doesn't cover care outside of the United States at all. And on top of that, the US State Department is very clear that the US government won't pay your hospital bills abroad, even in an emergency. How about that?
 

Many US insurance plans provide limited or no coverage internationally, and medical evacuation from a remote destination can be really expensive. Those are scenarios people don't think about until facing them.
 

The state department points out that getting transported to an appropriate medical facility or flown back home can cost a whole lot of money depending on where you are.
 

So after that, I started checking out the baggage side of things. Of course, airlines will help in whatever way they choose to, but the US Department of Transportation sets limits on how much they're required to reimburse you for lost or delayed luggage.
 

Travel insurance can help fill in those gaps and sometimes even cover essentials like food or lodging if you're stuck without your stuff.

Flights get canceled all of the time. Parents have emergencies. Storms roll in. Travel insurance isn't about pessimism. It's about acknowledging that travel involves variables.
 

So with all that said, the very common question of is travel insurance worth it? Can now be answered. That answer being, it depends.

It is definitely worth it in situations where you're doing a lot of stuff you can't get refunded for. Think tours, specialty cruises, and so on. It's also worth it when your trip's itinerary has a lot of tight connections or a bunch of checked luggage. And, of course, it's worth it when traveling internationally or to a remote destination or getting to an appropriate medical facility can be costly. If you have any preexisting conditions or pregnant while traveling, it's something you may wanna consider too.

It's pretty simple. If a covered reason prevents you from traveling, you can be reimbursed for your prepaid non refundable costs. In practice, that means you get sick before departure as an example. A doctor advises you not to travel.
 

You cancel your trip. You provide documentation. The insurance reimburses the portion you couldn't recover from the airline, the cruise line, or the tour operator. Really, what it does is it fills the financial gap between the refundable and what you'd otherwise lose.
 

Nice. Now you have an idea of what the heck travel insurance is and how to decide if it's worth it for your trip. So you should just buy it at checkout. Right? Yeah. Well, pump the brakes for a second there.

Travel insurance works like auto or health insurance. You can shop around for a plan that fits your trip. So clicking that passive aggressive no button at during checkout isn't really the end of the world. And when you're comparing plans, there are a few things worth keeping in your back pocket.
 

Let's start with the basics. Match the coverage to the trip. Pro tip. If you're heading overseas, the state department actually recommends making sure you've got real medical coverage and strong evacuation coverage, not just the bare bone stuff.
 

Pro tip. Buy a plan early so you can unlock any extra perks, like cancel for any reason upgrades that'll disappear the longer you wait.

Expedition and high investment travel immediately come to mind. And Antarctica is a perfect example.
 

I'm taking a group of thirty travelers to Antarctica on expedition cruise in twenty twenty seven. This isn't a refundable long weekend. It's a major financial investment booked far in advance with strict cancellation policies, international flights, charter connections, and weather dependent logistics. On this trip, I will highly recommend to cancel for any reason protection.
 

Not because we expect something dramatic, but because life does happen. A family situation changes, a job shift occurs, a training injury pops up. With a remote bucket list expedition like Antarctica, the evacuation costs alone could exceed six figures. On trips like that, insurance isn't an add on.
 

It's part of the trip strategy.
 

Pro tip, take a peek at your credit card benefits because some cards quietly have bits of travel protection that can save you money if you know they're there.
 

Some cards may include trip delay reimbursement, lost luggage protection, rental car collision coverage, limited cancellation or interruption benefits. Those can be valuable layers of protection, especially on shorter trips.
 

And no matter what you end up choosing, hang on to your receipts, airline notices, medical records, basically anything tied to your trip because future you will be very grateful if and when it's time to file a claim.
 

When travel insurance claims go smoothly, they have one thing in common, strong documentation. Insurance companies don't operate on emotion. They operate on documentation.
 

So hey, just like that, you're ready to plan your next big trip with peace of mind because you now know what the heck travel insurance is.
 

Pay That Bill is a podcast designed to entertain and, more importantly, educate. The show was produced by Virginia Credit Union and is developed alongside our award winning financial education team.
 

We have a library full of free resources available online that can help you on your journey to financial success. If you want to learn more about what we talked about today, check out the links we have in the description of this episode. The information provided in Pay That Bill is for educational and informational purposes only and should not be considered financial advice. While we aim to share helpful insights and general strategies, every listener's financial situation is unique. Please consult with a qualified professional for any investment or financial advice. The hosts and guests of this podcast are not responsible for any outcomes resulting from actions taken based on the content discussed.