How to Protect a Fixed-Income Travel Budget With Retirement Travel Insurance
Key Takeaways
- Travel insurance can help retirees travel more confidently on a fixed income by protecting the money they’ve invested in a trip and limiting exposure to large unexpected expenses.
- Comprehensive travel insurance covers a wide range of travel disruptions such as medical emergencies, cancellations, and travel delays.
- Travel insurance reduces the financial risk of budget travel methods, like purchasing travel far in advance and booking non-refundable fares.
- Travel insurance may cost slightly more up front, but can save you money in the long run, especially by protecting you against catastrophic medical expenses.
- You can compare travel insurance quotes on Squaremouth to save money on travel insurance, among many cost-saving options.
Do You Need Travel Insurance on a Fixed Income?
Travel insurance is an essential line of protection for people traveling on a fixed income. Travel in retirement can be very expensive, and if you are on a fixed income, you may be searching for ways to stretch your travel dollars.
Fortunately, there are many ways to take your travel budget further, like:
- Using credit card points
- Purchasing travel far in advance
- Booking non-refundable rates
- Traveling off season
- Traveling to more distant destinations
- Driving instead of flying
- Spending more time in one destination
- Taking discounted group tours
- Consolidating all your travel into one big trip
Travel insurance may seem like an unnecessary expense when you’re trying to save money. However, many of these budgeting strategies can leave you vulnerable to financial losses if something goes wrong.
Travel insurance can potentially save you money in retirement, by allowing you to pursue budget travel without putting yourself at financial risk. Here’s how:
How Travel Insurance Supports Travel on a Fixed Income
Using Credit Card Rewards Points
Using rewards points earned from your credit card purchases can help offset your vacation costs. Retirees often choose to rely on their card’s travel insurance to cut costs, but credit card policies have many gaps in protection, especially for medical emergencies.
>>Purchasing travel Medical Travel insurance can fully protect you against medical emergencies that your credit card travel insurance doesn’t cover.
Purchasing Travel Well in Advance
Retirees, who have more leisure time to plan their vacations, tend to book airfare, hotels and cruises 3 to 6 months in advance of their travel dates. This can save money, but there’s also a higher chance of a disruption derailing your plans.
>>Trip Cancellation and Cancel For Any Reason (CFAR)coverage can protect you against all the random scenarios that can occur between making the first payment on your trip and departing on your voyage.
Booking Non-Refundable Rates
Many travel providers, including airlines and hotels, offer steep discounts for booking non-refundable travel. This can save you 50% up front, but puts you at risk of losing hundreds or thousands of dollars if you need to cancel your reservations.
>>Trip Cancellation insurance can ensure that you’re fully reimbursed for a non-refundable booking in case you need to cancel your trip.
Traveling During Off Season
Retirees have more flexibility to take advantage of last-minute discounts and book off-season fares for a much lower rate. Unfortunately, traveling off season includes a higher risk of inclement weather, including hurricanes.
>>A travel insurance policy that covers severe weather, including hurricanes and winter storms, can protect you in case you need to cancel your trip or come home early due to an unexpected turn in the weather.
Traveling to More Distant Destinations
Far away destinations like Thailand and Vietnam can be much cheaper than nearby countries. Retirees may opt to travel to these places to enjoy luxury resorts, gourmet dining, and private tours for a fraction of the cost. These countries also have safety and medical risks, like mosquito-borne and foodborne illnesses.
>>A travel insurance policy with strong Emergency Medical and Medical Evacuation coverage can cover the medical risks of venturing to distant areas.
Driving Instead of Flying
Retirees often choose to drive because it can be cheaper than purchasing airfare, depending on the price of gas, your car’s fuel efficiency, and the number of travelers. Road trips come with unique risks like traffic jams and vehicle break-ins. If you’re renting a car, you might also be on the hook for rental car damage if you get in an accident.
>>Look for travel insurance that covers road trip risks. If you’re renting a car, you’ll need primary Rental Car Insurance to protect against theft or damage of your vehicle.
Spending More Time in One Destination
Retirees may opt for “slow travel” because it allows you more time to soak up a single location. You can also save money by minimizing transportation costs, booking accommodations by the month, and relying on a kitchen in a vacation rental for most of your meals. Increasing your vacation length can cut down on your average cost per day, but it also raises the risk of a medical emergency occurring on your trip.
>>You’ll need Medical Travel insurance that protects you against medical emergencies for the full length of your stay.
Taking a Group Tour
In some cases, especially for solo travelers, a group tour can be more economical than traveling on your own. Group tours are typically non-refundable and have to be paid far in advance. You could lose a large chunk of cash if you need to cancel your tour, or your tour operator goes bankrupt.
>>You’ll need Trip Cancellation and Trip Interruption coverage in case you need to cancel or cut your tour short.
Taking a Single Trip Rather Than Several Smaller Ones
Retirees may minimize travel expenses by traveling in one big shot, cutting down the expense of overseas flights while using trains, buses and short flights to hop around. As mentioned, longer trip durations increase your risk of a medical episode while traveling. It also carries more financial risk, since you’re investing your full travel budget in a single trip.
>>Travel insurance with strong Trip Cancellation and CFAR coverage helps protect your investment in your “bucket list” trip. Medical Travel insurance is also crucial for protecting against the risks of traveling for an extended period.
Is Travel Insurance Worth it on a Fixed Income?
Yes, travel insurance is worth it on a fixed income. For an average cost of around $40 per day, a comprehensive travel insurance policy can protect you against hundreds of thousands of dollars in potential losses from your trip. It can potentially save you:
- Thousands of dollars in hospital and doctors fees due to a medical emergency on your trip.
- Over $100,000 in medical transportation costs if you need to be evacuated or repatriated.
- The cost of your entire trip if you need to cancel unexpectedly. (Our Q1 Travel Insurance Trends Report shows that trip costs are at an all-time high, surpassing $7,250 for the first time in over 2 decades.)
- $100+ dollars on a hotel stay, plus food and transportation costs if your flight is delayed overnight.
- Hundreds of dollars in clothing and essential toiletry purchases if your luggage doesn’t make it to your destination.
Travel disruptions are a near certainty if you travel frequently. Travel insurance can reduce the expense of travel mishaps and help protect your finances as you adventure around the world.
Tips For Getting Affordable Travel Protection on a Fixed Income
Prioritize Medical Coverage
If you’re not concerned about non-refundable trip costs or cancelling your vacation, you should at least consider purchasing travel medical insurance. It’s a must-have for retirees traveling internationally, since Medicare generally doesn’t cover medical care outside the U.S. and hospital care can be very expensive. We recommend at least $50,000 in Emergency Medical coverage and $100,000 for Emergency Evacuation. Consider purchasing even higher coverage if you’re adventuring somewhere very remote.
In our Senior Cruise Report, 84.65% of respondents said that Emergency Medical and Medical Evacuation protection are the most important benefits for cruise travel insurance. However, 30% purchased less than our recommended coverage amount.
Get a Credit Card With a Low Annual Fee
Many credit cards have built-in travel insurance, including trip cancellation coverage as a complimentary benefit of card membership. The Chase Sapphire Preferred, which only costs $95 per year, offers up to $20,000 worth of Trip Cancellation and Interruption protection. If you pair this with a medical travel insurance policy, you may have sufficient coverage for a lower-cost trip.
Consider Annual Travel Insurance
For frequent travelers and those that tend to book trips at the last minute, an annual travel insurance policy can cost much less per day than purchasing multiple single-use policies and can cover all your trip for a year.
Note, before you purchase an annual travel insurance plan, be aware of all the limits. Most offer no coverage or very low limits for Trip Cancellation or Interruption coverage. They may also cap your trip duration at 90 days or less, and have geographic restrictions.
Insure Only What You Need
The bulk of your premium is driven by Trip Cancellation coverage, so one way to limit your premium is to carefully calculate your trip cost. Make sure that you’re only including prepaid non-refundable costs, like, deposits, and non-refundable hotel, airline, and car rental bookings. Also, exclude any costs that are covered by your credit card’s travel cancellation insurance policy like airfare.
Learn how to calculate insured trip cost
Use a Comparison Site
You should always compare travel insurance quotes before purchasing a plan to make sure you’re getting the right coverage. Squaremouth’s travel insurance quote form allows you to filter down to plans that contain the exact benefits and coverages that you need. You can then compare prices and pick the lowest-priced plan.
FAQs: Retirement Travel Insurance
Should I Purchase Insurance Through My Cruise Line?
Cruise line insurance can sometimes make sense for retirees. It’s generally expensive and inferior to comprehensive travel insurance. But it can be a good value for older travelers in certain scenarios, like cancelling your cruise, because pricing is generally not dependent on age. Regardless, you should compare cruise insurance plans to make sure you’re getting the best coverage.
Should Retirees Buy Annual Travel Insurance?
An annual travel insurance plan may be a good choice for retirees who travel frequently, since the price is lower than having to purchase separate policies for multiple trips. But there are many restrictions compared to single policy travel insurance, including limited trip cancellation coverage and geographic restrictions.
What Travel Insurance Coverage Is Most Important for Retirees?
The most important coverage for retirees is Emergency Medical and Medical Evacuation. Older travelers have a higher risk of a medical event while traveling and personal health insurance, including Medicare, generally won’t cover healthcare outside the U.S. Travel medical insurance could save you from catastrophic medical expenses in an emergency.
Can Retirees Get Coverage for Pre-existing Conditions?
Yes, many travel insurance plans offer Pre-Existing Condition waivers if you purchase a policy within 14 to 21 days after making the first deposit on your trip. This is one of many reasons that it’s important to purchase insurance coverage early for your trip.