Why People Use Credit Cards When They Should Buy Travel Insurance

 

Buy travel insurance before you buy your next vacation. It’s not just a nice perk to have; travel health insurance is one of the most financially sound investments available today. Travel health insurance is also a vital component in an overall travel insurance package. If you become ill or injured while on vacation, travel health insurance will pay for hospital treatment, doctor and prescription medications and much more.

A classic example of how buying travel insurance now can save you money is a delay in your flight or rental car. In 2021, there was a huge problem involving United Airlines and their baggage handling system. At one point, it seemed that almost half of all bags were lost during the airline’s automated inventory system. This caused major delays on an international flight that was supposed to depart from Las Vegas. The entire delay lasted for two days.

Some passengers did not want to risk going without their luggage. They insisted on a refund for the money spent on the baggage fee and on the delay. What the baggage company did not provide was any form of compensation for the delay that occurred due to the failure to provide insurance. Travel credit card companies who sell travel insurance did not make this point clear to travelers. In fact, they encouraged frequent travelers to buy travel insurance even if the trip was delayed or cancelled.

By allowing travelers to purchase travel insurance plans with credit cards even when the trip was delayed or cancelled, the travel credit card companies inadvertently created a loophole in the preexisting requirement to purchase travel insurance plans. Because credit cards offer tremendous flexibility, some travelers ended up with what is called a non-refundable travel insurance plan and were billed when their trip was delayed or cancelled. When the refund for the pre-booked flight and hotel rooms was not granted, the traveler’s recourse was to use the credit cards to buy additional travel insurance plans.

Another way that credit cards influenced the travel policies that were offered was by increasing the level of deductible that was required to be paid when filing a claim. In other words, the cost of damage or loss would be automatically added to the traveler’s accrued travel credit. When using a credit card to buy travel insurance, this increased deductible would be deducted from any amount due when filing a claim. As you can imagine, this increased deductible significantly increased the premium payments made by travelers on travel insurance policies.

It is easy to see how the actions taken by credit card companies could have an adverse affect on the purchasing decisions of consumers. If there was ever a need to cancel or delay a trip because of an emergency, it would not be difficult for a traveler to obtain an extended travel credit. However, when the buyer chooses to use a credit card to buy travel insurance policies, he or she has given up all rights to cancel or change the plan without penalty. You might ask, if this is the case, why do so many people still choose to purchase travel insurance policies using cash or check?

The answer lies in the fact that people often forget that credit cards are only tools they can use to make purchases. If they did not carry some form of credit card at all, most people would not be able to acquire the much needed travel medical insurance policy. Travelers also tend to forget that buying travel insurance is not the same as getting sick while on a vacation. Even though a person is “well” in reality, he or she may still get sick during travel. Anyone who has ever had a serious medical problem while traveling knows that the aftermath can be very costly and cause unexpected stress to a family that was expecting a relaxing vacation.

If an individual purchases a comprehensive insurance plan that covers him or herself and his or her entire family, he or she will have the added protection of being protected from many of the unforeseen costs associated with health care while traveling. A good plan will not only pays for the cost of a doctor’s office visit, but also the cost of prescription drugs, hotel accommodations, rental cars, and any other services associated with health care. This type of plan also reimburses you and your family for the costs associated with an accident caused by a natural disaster such as a tornado or hurricane. A good insurance policy also covers the costs of getting your luggage repaired or replaced after an accident, and it also pays the price of a lost rental car.