When your newly retired clients chat about their plans for an upcoming dream vacation abroad, are you prepared to raise the topic of travel insurance?
While younger clients might dismiss the added expense as unnecessary, older clients should seriously consider such protection. Why? Travel insurance protects against more than lost luggage and weather-related travel delays. It includes coverage for medical care in a foreign country and, if necessary, medical evacuation.
That's critical because Medicare, the primary insurance for Americans age 65 and older, stops at the U.S. border, and even the most generous supplemental Medigap policy provides limited coverage overseas.
Michael Kirsh, a financial planner in New York City specializing in retirement, has personal experience with travel-related medical costs. When his elderly father-in-law took a trip to Hong Kong eight years ago, he became seriously ill and was hospitalized for over a month.
Far from home and without medical insurance, Mr. Kirsh's father-in-law had to pay for his care on a weekly basis with a credit card. The final tally was more than $100,000.
It is a lesson that Mr. Kirsh has taken to heart and incorporated into his financial planning practice. So has his wife, Marcia Kirsh, who runs a luxury travel agency in New Jersey. She uses the story of her father's health care nightmare as a cautionary tale when discussing international travel plans with older clients.
"People don't realize that they are not covered when they travel abroad," Ms. Kirsh, of Travel Experts in Cresskill, N.J., told me.
"I ask every one of them if they want to purchase insurance," she said. "Some of them buy it. Others say they are willing to take their chances."
A recent survey by TravelInsurance.com of more than 1,000 adults who travel several times a year found that nearly half of the respondents didn't know whether their health insurance provides coverage while they are outside the U.S. For people 65 and older, it's a sure bet that Medicare does not cover medical expenses outside the U.S.
Even the most generous Medigap policy, Plan F, provides limited coverage abroad. The AARP Plan F policy sold by United HealthCare Insurance Co. covers 80% of medically necessary emergency care services during the first 60 days of an international trip, with a maximum lifetime benefit of $50,000 after an annual deductible of $250.
In comparison, a married couple who are both 65 or older could buy a travel insurance policy for a two-week, $10,000 trip to Europe for less than $800, according to TravelInsurance.com, a site that allows consumers to compare costs and features of a variety of travel insurance policies.
For example, a policy from Travel Insured International includes $1 million of medical evacuation coverage per person and $100,000 of medical coverage per person with no deductible. It also includes trip cancellation coverage for 100% of the insured cost of the trip, trip interruption protection for up to 150% of the trip cost and $1,000 per person lost luggage protection.
That same couple could buy a medical-only travel insurance policy with $1 million of medical evacuation coverage per person and $1 million of medical coverage per person for less than $400. Or, for as little as $145, the couple could buy $100,000 of medical evacuation coverage per person and $50,000 of medical coverage per person. That could be a good, low-cost option for someone who's enrolled in a Medicare Advantage plan that offers no medical coverage abroad or who has original Medicare and a Medigap supplemental policy that does not offer any medical coverage outside of the U.S.
The TravelInsurance.com survey found that 22% of respondents will spend more than $5,000 on leisure travel this year. Older travelers tend to spend the most as they typically have greater disposable incomes, take longer trips and spend more on vacation travel than their younger counterparts.
"A travel insurance policy could be a lifesaver for some people, between the medical coverage and the medical evacuation protection," said Stan Sandberg, co-founder of TravelInsurance.com. In addition to the coverage for health care costs abroad, travel insurance provides 24/7 telephone assistance anywhere in the world.
"If you're on vacation and have a medical emergency, you don't have to navigate a foreign healthcare system," Mr. Sandberg said. "You're just a phone call away from help."
Travel insurance is a time-sensitive purchase. It's best to purchase as soon as you book a trip, particularly if you buy nonrefundable tickets. It protects you if plans change, if weather disrupts your trip, or if a traveler or a family member becomes ill. Travelers with health issues can usually purchase a preexisting waiver for an additional fee. Prices are based on trip length, duration, destination and travelers' ages.
For example, when my husband and I took a European river cruise last summer to celebrate our 40th wedding anniversary, we bought comprehensive trip insurance for about $1,400 — about 9% of the total cost of our trip.
A few months later, we insured a briefer, less expensive trip to London for a total of $170. I bought a similar insurance policy for my 34-year-old son who planned to travel to several European cities after our London visit for an additional two weeks. His policy cost $34 — less than the price of an Uber trip to the airport.