Hitting The Road in 2023? Best Practices for Buying International Travel Insurance

If 2022 was the year going abroad began to normalize, 2023 is when international travel reaches “full recovery.”

That's according to one December survey, which forecasts international travel will return to pre-pandemic levels.

This is causing an uptick in travel insurance purchases for overseas trips. An analysis of sales made in late 2022 through one online travel insurance marketplace showed that nearly 90% of insured travel was for international destinations – the first time the metric reached 2019 levels.

Yet, with inflation on the rise and a likely recession hitting the US, how will travelers afford their cover?

This article will look at the most popular insured international destinations for the year, weigh the differences between the generations when it comes to travel cover, and consider some sound advice for choosing the best plan for your budget.

The Adventure Begins

The poll, released by online travel insurance marketplace Squaremouth, reveals travelers are planning bigger trips and going to more remote destinations in the new year.

Besides America's neighbors – Mexico and Canada – preliminary trip data lists Japan, the Bahamas, Israel, Costa Rica, and Spain among some of the top destinations for the year.

Antarctica also broke into the ranks of top destinations for 2023 for the first time ever. Getting to the bottom of the world won't be cheap, though. Trips to the world's icy continent average nearly $18,900, according to an analysis of Squaremouth's sales data.

Yet many travelers are forking out more for their overseas odysseys. On average, international trips cost travelers 25% more in 2022 compared to what they did in pre-pandemic times. The budget bloat is even more pronounced among younger travelers. Millennials, for instance, saw a whopping 40% increase in spending on their trips compared to before the pandemic. Squaremouth predicts travel costs will continue to rise this year too.

There can be significant differences between the generations when it comes to travel insurance too.

While Baby Boomers and Generation X travelers will return to their pre-pandemic levels this year, Squaremouth anticipates Millennials and Gen Z will buy travel insurance at higher rates than in 2019.

Travel insurance is popular for its financial protection in case of trip cancellations or delays due to unforeseen circumstances, such as a virus outbreak, natural disasters, etc. Typically, plans cover medical expenses in case of injury or illness while traveling, including emergency evacuation and repatriation. Many plans cover lost or stolen luggage and personal belongings too.

Travel insurance can be expensive, especially for longer trips. Even plans that seem very comprehensive may only cover some things, and claim processes can be time-consuming and may require extensive documentation. Depending on where travelers are heading, some travelers may not need to purchase a plan before hitting the road.

In some cases, buying a plan isn't necessary to get coverage. Some consumers may even already have travel insurance and simply aren't aware of it.

“For clients considering travel insurance, I ask them to review the benefits offered by the credit card used to book the trip,” said Chris Kimmet, CFP, founder of Steady Climb Financial Planning.

“Many credit cards offer travel insurance as an included perk, so there's no reason to purchase extra protection they don't need.”

Devil in the Detail

There are several essential aspects to consider when weighing up travel insurance.

Look for a plan that covers cancellations or interruptions of your trip due to unforeseen circumstances, such as a natural disaster, illness, or the death of a family member. It should also cover lost, damaged, or stolen items. Ideally, the best plans are customizable so travelers can tailor them beyond the basic cover to their specific needs.

Medical coverage is core to all travel insurance plans, but it has become more complicated since the pandemic. It pays to check the details of coverage for COVID-related healthcare costs.

“Compare your current medical coverage with coverage by a travel insurance policy when it comes to COVID-19-specific incidents, as many policies have excluded pandemic-related medical needs,” said Bradley Hilton, Founder of Sonas Financial Planning.

Hilton recommends buyers check with the insurance provider if there are any exceptions in coverage for specific virus variants before buying.

“Consider the potential need for medical evacuation or “medivac” services coverage that a travel insurance policy may offer,” he adds. “This is especially important if you expect to visit more remote destinations and may have concerns with their medical system. Transporting you back to the United States can be especially expensive.”

Although it may be tedious, going over the plan with a fine comb is essential. There are numerous examples of loopholes coming back to haunt claimants.

“In 2015, I visited Ireland and discovered mid-trip the travel insurance policy I purchased specifically excluded rental car coverage in only Ireland and South Africa,” said Bryan Wisda, President of Almega Wealth Management.

“A client who recently visited Peru to hike Macchu Picchu learned they had to specifically buy a travel policy which covers hiking as certain travel policies consider hiking a hazardous sport. Now I tell all my clients going on trips overseas to read the travel insurance policy before they buy.”

Your needs for travel insurance requirements always vary depending on individual circumstances.

Some travelers may want a comprehensive policy, while others only look for specific coverage. Still, others may decide to pass on a plan at all. Every individual traveler must make the call on what's best for them. Yet if the pandemic, geopolitical conflict, and recent climate disasters have taught us anything over the last couple of years, it is to expect the unexpected when venturing out into the big wide world.

This article was produced and syndicated by Wealth of Geeks.