This Is Why You Need to Get Travel Insurance to Protect Your Trips This Year
Introduction
Even though it’s only the beginning of the year, you're likely already planning your vacations. If you plan on traveling at all, you should consider getting travel insurance to cover your trips. Travel often involves a lot of moving parts, and any disruptions can cause major financial losses.
Image Description: A family at an airport checking their travel insurance documents before boarding a flight.
1. To Cover Nonrefundable Expenses When You Cancel a Trip
No matter how well you plan ahead, unexpected things happen. If you end up having to cancel your trip due to a change in plans, you may not be able to recover all your prepaid and nonrefundable trip payments like flights and hotel reservations.
3 Charts That Explain the Retirement Crisis
Introduction
Retiring used to be like riding in an airplane. You got on the plane with all the other passengers and left the business of flying the plane to a professional. Those were the days when pensions ruled. Employers managed their workers' retirement money and guaranteed them an annual payment when their working days were done. Today, most people have to fly the plane on their own. Pensions have mostly been replaced by 401(k) plans, putting employees in charge of managing their own retirement savings. Here are three charts that illustrate the challenges of the current retirement landscape.
Image Description: A chart comparing the prevalence of defined contribution plans like 401(k)s versus defined benefit plans like pensions over time.
Are People Ready to Retire?
More people than ever are flying their own retirement planes, but it turns out most don't know how to work the controls. The majority of workers don't feel they're on track to meet their savings goals. Even among people over 60, only 45% feel their retirement savings are on track.
One reason for this may be the job market. Inflation-adjusted wages sank after the Great Recession and were slow to recover. "It hasn't been until recently that we've even started to see any kind of wage gain," said Monica Dwyer, a certified financial planner for Harvest Advisors. Because of that, it's been difficult for many people to put aside enough money toward retirement. But saving enough is only part of the equation. Retiring requires people to invest their money wisely as well.
Image Description: A chart showing the percentage of people over 60 who feel their retirement savings are on track.
What Happened to Pensions?
Dwyer's father worked a union job with a pension. The union required workers to contribute to the pension, and Dwyer's father put a little extra aside to be especially prepared for retirement. When he stopped working at 55, he was able to earn more each year from his pension than he did from his salary.
But the decline in union membership took a toll on pensions, as did a change in the way people think about work. While many people stuck with the same company for a long time in the past, today changing jobs is seen as a way to get ahead. The Pension Protection Act of 2006 was meant to shore up struggling pensions by tightening up funding requirements. "They were trying to strengthen pension plans but what ended up happening is that for many companies they just couldn't keep up with the requirements," Dwyer said. Today many companies have ditched pensions in favor of defined contribution plans like the 401(k), transferring much of the risk to employees.
Image Description: A chart showing the decline of union membership and its impact on pension availability.
How to Avoid Crashing Your Retirement Plan(e)
The most powerful force in saving for retirement is time. "There's a huge benefit to the time value of money," Dwyer said. "The earlier you start, you're going to be way better off." And the longer you wait, the harder it becomes to save enough. Dwyer suggested a few other ways to help ease your retirement journey:
- Avoid Overspending: Don't overspend on big-ticket expenses like a house or a car. Only buy what you can afford.
- Hire a Co-Pilot: Given the stakes, hiring a professional financial adviser could be worthwhile.
- Prepare for Setbacks: Make sure you're financially prepared for setbacks. That means having an emergency fund, health insurance, and disability insurance.
- Don't Count on Social Security: The program's finances are in question, and even the full benefit may not be enough to maintain your lifestyle in retirement.
Image Description: Infographic summarizing tips to avoid financial pitfalls in retirement.
Conclusion
The retirement landscape has changed significantly, with more people responsible for managing their own retirement savings. Understanding these changes and planning accordingly can help ensure a more secure financial future. Start early, avoid overspending, seek professional advice, and be prepared for potential setbacks to navigate the challenges of retirement successfully.
Image Description: Infographic summarizing strategies for achieving a secure retirement.
Meta Description
Learn about the retirement crisis through three informative charts. Understand the shift from pensions to 401(k)s, the challenges of saving for retirement, and tips to secure your financial future.
Trip cancellation insurance will cover nonrefundable losses that result from a covered reason such as injury, illness, or death of a traveler, severe weather, jury duty that can’t be postponed, or the financial insolvency of a travel provider. If you need to cancel for another reason, there are more expensive options available.
“Trip cancellation insurance is only necessary when you have made non-refundable pre-payments for your trip like a non-refundable airfare or hotel room. To avoid the fine print of what is and isn’t considered an acceptable reason for cancellation, you may want to look into 'cancel for any reason' insurance, although it may be more costly,” said Grace Henes, editor at TravelPirates.
Image Description: Infographic explaining the benefits of trip cancellation insurance and covered reasons for cancellation.
2. To Cover Losses Experienced While Traveling
Travel insurance can also help you recover from other common losses that occur during your travels. There are many types of coverage to help protect you during your trip:
Trip Delay Insurance
This will reimburse expenses incurred during covered travel delays. For example, if your flight is delayed overnight due to severe weather, trip delay insurance can reimburse you for lodging expenses.
Baggage Delay Insurance
This covers the cost of necessities (think toiletries, clothes, and other essentials) when your baggage is delayed beyond a certain amount of time.
Lost Luggage Insurance
This reimburses you for losses when your luggage is lost entirely — though there are exclusions.
Image Description: Infographic showing different types of travel insurance coverage for losses experienced during travel.
3. To Provide Health Coverage and Emergency Aid
In the case of a medical emergency, your health insurance plan might not be sufficient — many policies limit the types of treatment covered while traveling abroad or only provide partial coverage. If you need to see a doctor while traveling, you might be on the hook for those expenses.
Travel insurance policies can be a literal lifesaver in these situations. Most comprehensive policies offer the option of covering illnesses or medical evacuation, or separate travel health insurance can be purchased to cover any medical emergencies. Henes recommends purchasing additional travel health insurance if you are planning on “adventure travel” like mountain-climbing.
Image Description: Infographic showing the importance of travel health insurance and what it covers.
Using Your Credit Card to Get Travel Insurance
Many credit card issuers already provide some level of travel insurance coverage, especially for customers with travel rewards cards. However, there are limitations and exclusions, and not every card issuer provides the same level of coverage. Check your credit card statement benefits to see what — if any — travel coverage you have.
You may also want to stack third-party travel insurance on top of your card’s existing policies. For example, if your card has cancellation and delay insurance but no medical coverage, you could purchase a travel health insurance policy on your own.
Remember, you generally have to put travel purchases on your credit card to receive the benefit of the card’s insurance.
Image Description: Infographic explaining how to use your credit card's travel insurance benefits.
Conclusion
Travel insurance is a worthwhile investment to protect your trips from unexpected disruptions. Whether it's covering nonrefundable expenses, protecting against travel losses, or providing health coverage in emergencies, travel insurance can save you from significant financial losses. Check your credit card benefits and consider adding a comprehensive travel insurance policy for complete peace of mind.
