INSURANCE DOS AND DON’TS WHILE TRAVELING

When you make a big purchase such as a car or a home mortgage or an overseas vacation from a travel agent the chances are good that you have been offered point-of-sale insurance to safeguard your outlay of money. According to Brian Greenberg, founder of True Blue Life Insurance, “While insurance itself is a good thing to have, an additional impulse buy at the time of purchase is probably not a good idea. Very often these insurance instruments are superfluous and may be very expensive.”

However, coverage for Accidental Death and Dismemberment (AD&D) is one of the benefits of travel insurance that many people don’t want to think about, but may be quite important for certain travelers. Accidental Death coverage works very similarly to a life insurance policy, in that you would name a beneficiary upon purchasing your travel insurance, and that person would receive the benefit in the event of your death or dismembering injury while traveling. However, the benefits paid by your travel insurance AD&D coverage would be in addition to any benefits that were also paid by any life insurance policy you may have already had in place.

Here are a few other types of insurance for travelers specifically:

Vehicle insurance

Car dealerships usually offer you a host of insurance options when you purchase a new or used vehicle, like scratch protection or an extended warranty. As long as these are offered simply as add-ons that you are not obligated to purchase, it’s a perfectly legitimate sales technique. But if the dealership even hints that you can get a discount when you buy any other item like insurance then they have crossed the line, and you should avoid doing any further business with them.

And this in not just a problem in the United States; in 2016 an Australian government commission warned consumers against being pushed to buy additional insurance when they purchase a vehicle. Over the past several years about $1.6 billion was spent on add-on premiums purchased at car dealerships, and only a measly $144 million was ever paid out over that same time period for claims. Somebody made off like a bandit — and it wasn’t the car buyer!

Insurance for other consumer goods

This problem of unnecessary insurance add-ons is not limited to car dealerships. It’s prevalent everywhere, even online. How often have you shopped around online to find a bargain only to find out that the bargain price is contingent on the purchase of a warranty or some other kind of add-on insurance? The seller always says it’s a very small extra cost that you won’t even notice. But you’ve got to stop and ask yourself ‘is it really worth it?’

Almost every large ticket item that you purchase today is already covered by state and federal laws that state the item being purchased must be free from any major flaws or possibility of flaws in the foreseeable future, and that it is both durable and safe — this usually means that your purchase is already covered with some kind of mandatory warranty, both by the manufacturer and the seller.

Traveling insurance

Traveling insurance from your travel agent may sound like a smart idea, but don’t be too hasty about protecting yourself from lost luggage, foreign medical bills, or a cancelled flight. A lot of this is already covered when you pay with a credit card. Check out the perks your credit card guarantees when you book your flight or pay for your cruise that way — it’ll surprise you how many different things are already covered.

Loan protection?

Banks and credit unions are very eager to sell you additional protection policies when you purchase a mortgage. And it’s not because they really care about your protection. It’s because they usually get a handsome commission for these add-on sales. So go slow when your banker or finance officer offers you ‘peace of mind’ protection on a substantial loan. Or as additional life insurance. But remember to check your employee benefits first, because chances are that kind of thing is already covered by your employer. And if you decide that some additional insurance is a good idea on your loan, check with your own insurance agent, if you have one, first. Get some quotes so you have some idea as to whether what your bank is offering is competitively priced or is inflated to take advantage of that old bugaboo impulse buying.