Travel Insurance Demystified! What You Need and How to Get It
What kind of travel insurance do I need?
This is a question that can perplex even the most experienced digital nomad or a long-term traveler.
But we have some simple answers. To begin with, here are the five kinds of insurance you should consider:
FIVE KINDS OF TRAVEL-RELATED INSURANCE
A Long-Term Health Care Plan. This is the kind of comprehensive plan that, if you’re in the United States, you get through your employer or Obamacare; most other countries offer it through their governments. This kind of insurance has no annual caps, no ban on preexisting conditions, and (in the United States), it covers the “ten essential benefits,” including preventative care, prescription drugs, mental health, and maternity care. This is not travel insurance per se, and it may not pay anything while you’re traveling internationally, but it’s coverage you can count on if you have a very serious condition, like cancer, or develop some other kind of long-term, chronic condition. Many people who are away from their home countries for months or years at a time think they don’t need this kind of insurance, but we think this is a mistake, especially if you’re older.
Travel Insurance: Medical Emergencies. This is what most people mean when they think of “travel insurance.” It’s coverage that pays for medical care that you need while traveling. But these kinds of travel policies typically cover only medical emergencies and related expenses (like a prescription for that illness), and not preventative or routine care, mental health, preexisting conditions, or other long-term or chronic issues. For these more serious issues, you still need the long-term healthcare plan mentioned above. These “travel” plans, meanwhile, also have lifetime or annual “caps,” which means once you’ve used up that amount of money, the policy pays nothing more. There can also be other exclusions that are of note to travelers, like no coverage for injuries sustained in extreme sports or due to terrorism or risky behavior. Most policies also exclude certain countries, especially places like Iran, North Korea, and Cuba. Dental and optical may or may not be covered.
Travel Insurance: Trip Cancellation, Trip Interruption, or Theft. This is the second part of most “travel insurance” policies: coverage that reimburses you if a trip if delayed, interrupted, or cancelled, or if you need to fly home for a family or medical emergency. Policies can also cover you in cases of theft or vandalism (within limits).
Expatriation Insurance. This is insurance that pays for you (or your body) to be brought home from another country, or from a remote area to a hospital that can give you the help you need. This can be very, very expensive — as in, hundreds of thousands of dollars. That’s because it can involve helicopters, or hospital beds on private planes. This kind of travel alone can wipe a person out financially, even if they have all three kinds of insurance listed above.
Travel Life Insurance. This is insurance that pays money to your loved ones in the event of your death while on the road, or to you in the case of, say, dismemberment or another major disability.
The problem? There is no one policy that offers all of the coverage listed above. And some people may not want all this coverage. So what do you really need, and how do you go about getting it?
OPTIONS FOR TRAVEL-RELATED INSURANCE
An Employer or National Health Care Plan, or Obamacare. Ideally, every person has some kind of comprehensive plan that covers everything in the case of a major medical catastrophe, like cancer. But Obamacare is expensive, even with subsidies. And while some national plans from other countries will pay for medical cost overseas, Obamacare does not, nor does it pay for expatriation.
Travel Insurance. Most travel insurance policies allow you to add different options, or have different policies you can choose from. These options include:
Medical emergencies. But these policies usually cover only medical emergencies, and payouts are always capped at a maximum amount. These policies are not long-term policies, they may not cover preexisting conditions, and they’re not subject to Obamacare’s Ten Essential Benefits. Most travel insurance doesn’t cover travel in and around America, or you’ll pay a higher fee for it. Also, if you return to your home country, even briefly, the policy may be cancelled.
Trip cancellation or interruption, and theft. These options are good if you’re on a tight budget, and you can’t eat the cost of a cancelled or delayed trip, or a stolen laptop.
Some medical transportation. While these policies will typically cover the cost of bringing you to the local medical facility, this isn’t expatriation insurance — and it typically won’t pay the sometimes exorbitant cost of bringing you home (or, if you’re in a really remote area, to a state-of-the-art hospital in a big city).
A Dedicated Expatriation Policy. To get full medical transportation coverage, you probably need a dedicated policy for this, or you need to specify this option on your travel insurance policy. We strongly recommend this. And make sure your partner and/or loved ones know about this coverage, so they can make the proper arrangements.
Credit Card Travel Insurance. Credit card companies often advertise that they provide “travel insurance,” but what this usually means is that they might provide some theft insurance, or trip interruption or cancellation coverage, and maybe a small life insurance pay-out. A few cards do provide (modest) medical coverage, but if they do, you’re probably paying an annual fee (and you’ll probably know about it, because they’ll make a big deal out of it). Needless to say, this kind of coverage only applies to flights and other activities purchased through the credit card. Check your credit card for details (and if you travel, you should have a “travel” credit card which doesn’t charge foreign transaction fees; these kinds of cards are also more likely to have at least some kind of limited travel insurance).
Other Miscellaneous Insurance. Are you on a tour? Book a cruise? You might have preexisting coverage, or it might be an add-on. Ask for details, and of course get them in writing. And if an airport or tour company loses your luggage, they’re probably liable for the cost.
How about a case study? Here’s what Michael and I do:
BRENT AND MICHAEL: A CASE STUDY
We don’t have insurance through an employer, so we maintain a US-based Health Insurance Policy via Obamacare. If either of us has a serious accident or gets a major illness, we know we can return to the US, and we’ll be fully covered. But this provides zero international coverage, and even a basic bronze policy is expensive.
Since health care tends to be cheap in the countries we visit, and because we have money set aside, we don’t carry trip cancellation insurance, but do maintain Dedicated Expatriation Insurance that also has some basic emergency medical coverage.
We make major travel purchases through our credit cards, which offer some protections (see above).
RECOMMENDATIONS FOR COVERAGE
The following selections are recommended for long-term travel insurance needs, and include many of the options suggested above. Both companies cater specifically to digital nomads.
Nutshell: World Nomads (which has been around much longer) offers more extensive coverage, but it is considerably more expensive. Safety Wing is a newer company, much cheaper, but their coverage is more limited.
Please note: We are not insurance or financial experts, so check with your personal adviser before making any final decisions.
Brent and Michael Are Going Places sometimes uses affiliate links, wherein a small portion of the sale is directed back to us, and is used to support the site. This never affects our reviews.