With summer quickly approaching, you could be asking yourself which expenses are worth the investment when planning ahead for your vacations. Especially when it comes to travel insurance, you want to make sure you are not overpaying for protection that may not be necessary.
Allied Market Research reports that the global travel insurance market was valued at $12.38 billion in 2020 and is expected to grow to $119.31 billion by 2030. This rise is in part due to more senior citizens traveling, as well as increased business travel expenses.1 As you might expect, tourism is one of the key factors contributing to this rise. According to The World Tourism Organization (UNWTO), there was a 4% rise in global international tourist arrivals in 2021.2
As you plan ahead for your summer vacations, there are a variety of factors you should consider before purchasing a travel insurance policy. While protection is never a bad thing, you want to make sure the value of the coverage outweighs the added cost. However, when it comes to longer and more expensive vacations, travel insurance could quickly prove to be a beneficial use of your money.
When to Consider Travel Insurance
One of the most common reasons you might want to purchase travel insurance is if you are taking an expensive vacation that includes non-refundable fees, such as your flight, hotel and transportation. While your credit card might reimburse you for a portion of these expenses, you could easily incur costs beyond its limit. Even if your chosen travel provider offers a reimbursement policy, it may not be as flexible as a travel insurance policy. Travel insurance could reimburse you for a myriad of reasons, including unexpected work requirements, illness and military deployment. Additionally, you may not have a restriction as to when you can cancel your trip, which is not always the case with travel providers.
More money upfront means greater concerns about unexpected circumstances or situations inadvertently changing plans with minimal or no prior notice. Accidents happen, especially when you are in an unfamiliar place participating in new activities. With travel insurance, you are protecting yourself from thousands of dollars of hospital fees that you could incur in the event that an accident or emergency happens while you are on vacation.
When to Skip Travel Insurance
If you are someone who enjoys taking shorter, long weekend trips, travel insurance may not be worth it. Especially when it comes to plane tickets and hotel bookings, the airline and hotel you choose may be able to reimburse your expenses if you decide to cancel, or at least offer you a credit so you can take the trip at a later date. It is important to read the fine print before making these payments in case refunds are limited or non-existent.
For those who have car insurance and a credit card specifically designed for travel, you may already be paying for the protection a travel insurance provider could offer. Instead of paying more money for double the coverage, you could instead maximize the policies you already have.
Evaluate Your Trip Thoroughly Before Committing
While extra protection could provide you with the peace of mind you need to fully enjoy your vacation, depending on the cost of the insurance policy, it may not necessarily be worth your time and investment. Especially if you are going on a relatively short and inexpensive trip within the states.
With so many providers in the market, you want to make sure that if you are going to get travel insurance, you get the coverage that makes the most sense for you. From the location of your trip to potential medical surprises, it is a good idea to outline your top concerns to determine which policy best suits the needs of both you and your family.
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LPWM LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers.