January 2013: Is travel insurance a good idea? Maybe, maybe not.
- First, crunch some numbers. A tour package may have set cancellation penalties in the back of the brochure, but hotels can usually be cancelled within 24 hours. If you’re not traveling for four months, why take out insurance that covers a hotel? Make sure you know the risk you want the insurance to cover. Flying? Cheap airline tickets tend to be nonrefundable – so could you take out insurance for the flight portion but skip the hotel? That would save a few bucks.
- Second, make sure the insurance is really insurance. If you’re not willing to read the fine print, it could be money thrown out with the garbage. They may call it “trip assurance.” (Insert joke here about “ass” versus “ins.”) It might cover “a medical emergency that occurs within two days before departure,” worded in a nice comforting way – but does it cover the complete cost of your trip? Does it cover you if a family member dies or only if you get sick? Does it cover any sickness while in Orlando? And if so, how does it reimburse you? An insurance policy is only as good as the company’s speed of reimbursement, assuming it reimburses you at all.
- Third, assuming it’s legit, what kind of insurance is it? Trip cancellation insurance is most popular, but that doesn’t imply any kind of medical coverage while away. (This becomes even more important if you’re slipping a cruise or other out-of-the-country trip into the itinerary since Medicare and other policies don’t always pay for problems in foreign countries.) You can also insure baggage, flights, etc. Sometimes they all come in a single policy; usually they don’t.
- Fourth, take a good look at the amount of risk you can stomach. Do you keep all your money in CDs because they’re FDIC insured? Take the insurance. Do you feel comfortable putting all your winnings on horse No. 9, “Bound to Fail,” in the seventh race? Skip the insurance.
Ninety-eight percent of the time, travel insurance is money you’ll wish you had in Orlando – but if something happens, you’ll really wish you had it.
You throw the dice and you take your chances.