Trip insurance provides a financial backstop when you need it. But is it better to use a credit card with free travel insurance or buy a standalone plan? The answer may depend on your coverage needs and budget.
This article will help you evaluate and compare travel insurance vs credit card travel insurance. Keep reading to learn about the differences between the two and to see which might be best for your next trip.
What is travel insurance?
Travel insurance is a standalone insurance policy that you usually buy on a trip-by-trip basis. It is designed to cover medical emergencies and other unforeseen travel expenses that are beyond your control. There is also “Cancel for Any Reason” (CFAR) coverage, which is an add-on that provides reimbursement for voluntary trip cancellations within a specified time frame.
how travel insurance works
Travel insurance is different from other insurance plans in that you usually have to pay the full premium upfront. You almost always need to pay for coverage before you leave on your trip, but the exact requirement varies from provider to provider.
Once you have paid the premium, you will have access to the coverage specified in your insurance contract. You can buy an a la carte plan that only covers medical expenses or a more robust coverage that also helps with lost luggage, flight delays, and other unforeseen expenses. The best travel insurance companies will help you find the right fit for your goals.
Travel Insurance Pros and Cons
- Coverage is often more comprehensive than credit card travel insurance.
- Your payment method is flexible, as you don’t need to pay for the entire trip using a specific credit card to be eligible for coverage.
- There are many different travel insurance options available, making it easy to find one that suits your needs.
- Travel insurance covers the total cost of your trip.
- You may not need the coverage you bought
- Additional charges may apply if you want coverage for pre-existing conditions.
What is credit card travel insurance?
In addition to or instead of purchasing traditional travel insurance, you can also use the insurance included with your credit card. Some premium cards include travel insurance coverage in their services at no extra charge. However, these coverages often have lower limits and more exclusions, so it’s important to read the fine print before relying on them.
How does credit card travel insurance work?
Travel insurance credit cards often require that you pay for the entire trip with your card in order to activate the coverage. For example, you need to pay for your flight, hotel and rental car with the same credit card to avail the insurance. Some cards that are good for travel may also have an annual membership fee higher than what you are used to.
That being said, you usually don’t need to pay anything extra to access your credit card’s travel insurance if you need it. Therefore, all things being equal, credit cards with travel insurance can be more affordable than standalone plans.
Do note, however, that many credit cards with travel insurance have an annual limit. For example, the Chase Sapphire Reserve® card pays up to $20,000 in cancellation fees per trip, but has a maximum benefit limit of $40,000 per year.
Credit Card Travel Insurance Advantages And Disadvantages
- Gives you access to travel insurance without paying travel-specific premiums.
- Using a travel credit card often comes with additional benefits, such as reward programs that can save you money.
- You may be able to qualify for a travel credit card with less-than-full credit.
- You may need to make a credit card payment for your main travel reservation to activate coverage.
- Your travel insurance credit card may have much lower limits than standalone plans.
- Some credit cards do not provide coverage for medical expenses.
Tips for Finding the Best Credit Card for Travel Insurance
If you’re researching a list of Money’s best places to travel and are interested in credit card travel insurance, here are some tips to get you started.
Check if your existing credit card has trip coverage
First, take a look at your existing credit cards. It is possible that one of them already provides travel protection, and you do not have the opportunity to use them. You can usually find this information in your credit card agreement, which will likely be available through your online account.
Determine what type of coverage you need
If you decide you need to get a new credit card to get the insurance you want, start by considering what coverage you need. Are you looking for financial protection only for lost luggage and unexpected flight delays? Do you also want medical insurance with your travel credit card?
Keep in mind that you can always supplement credit cards that offer travel insurance with smaller standalone plans. For example, if you find a card you like that doesn’t offer travel medical coverage, you can buy that coverage à la carte for less than what you’d pay for comprehensive travel insurance.
Analyze coverage limits
Once you’ve found the best credit card travel insurance for your needs, take a close look at its coverage limits before applying. These are often lower than the limits of standalone insurance plans and may not be sufficient for everyone.
Is it better to get travel insurance through a credit card or a separate travel insurance policy?
If you want travel insurance at the lowest possible cost, then choosing one of the best travel credit cards would probably be right for you. These cards typically provide coverage at no additional cost (besides any annual card fees), according to the US Travelers Association, while standalone travel insurance policies typically cost between 4% and 8% of your total travel costs. it occurs.
However, if you are looking for the best cancellation for any reason travel insurance, your only option may be to buy a standalone plan. Similarly, traditional travel insurance may be better for travelers with expensive vacations, as these plans typically have higher coverage limits.
The bottom line is that a credit card with travel insurance will typically be more affordable, while a standalone plan will typically provide more robust coverage. The better choice for you will depend on how strongly you prefer one of those benefits over the other.
Which credit cards have travel insurance?
There are many different travel credit cards available in 2023. In addition to our list of the best travel credit cards above, our best airline credit cards might be a good place to look for other options as well.
Is Credit Card Travel Protection Enough?
There are some situations in which obtaining travel insurance through a credit card may be sufficient. These cards often provide coverage for lost luggage, flight delays, and accommodation problems. If this is the only coverage you need for upcoming travel, the protection offered through a credit card will probably be sufficient.
However, there are also scenarios when this may not be enough. For example, your travel costs may exceed your credit card travel protection limit, or your card may not offer the robust emergency medical coverage you want.
Deciding where and how to get your travel insurance will ultimately depend on the type of coverage you want and the limits and exceptions you are willing to accept.
Alternative ways to insure your travel
If you don’t think credit card travel insurance or traditional plans are right for you, you may want to look at a few alternatives. Here are three that are worth considering:
- Direct Travel Protection Plan from Companies: Some companies offer their own insurance to visitors. It is usually sold as an add-on when you book a hotel, flight or tour. The general idea is that you pay an additional fee to the company to give yourself the flexibility to cancel if needed, and still get a full refund. This is an option you’ll often find with cruise lines, online travel agencies, and large tour operators. You may be able to save money compared to canceling anytime. However, you’ll only have coverage for a portion of your trip, rather than the whole thing. Additionally, medical insurance is usually not available.
- Short-term coverage from your current health insurance provider: It’s also possible that your current health insurance provider has short-term coverage options designed for international travelers. You may be able to access these plan upgrades for a one-time fee. When talking to your health insurance provider about this, be sure to ask about any coverage exclusions or limits that you should be aware of. Some domestic providers may only offer coverage in certain countries, and others may only cover specific emergency medical conditions.
- Membership Program: Finally, it may also be worth looking into membership programs that cover the cost of medical evacuation. These are offered by independent companies and are meant to provide more in-depth evacuation coverage for travelers who may need it. Membership programs can be purchased alongside a standard travel insurance plan or in place of one. But they are of limited use to most travelers and will probably only matter if you’re planning an extreme adventure trip.
Summary of Money’s Credit Card Travel Insurance Vs Travel Insurance
The best credit cards for travel insurance offer protection comparable to standalone plans. Both options can provide coverage for delayed flights, lost baggage, unexpected Cancelled and other expenses that you may incur during the journey through no fault of yours.
Credit card travel protection is usually more affordable than standalone insurance because it is included with your credit card at no additional cost. However, you may not have medical coverage through your credit card and the limits and exclusions may be more restrictive.
The bottom line is that your coverage goals matter a lot when choosing between credit cards and standalone travel insurance plans. If you want strong coverage, a traditional travel insurance plan will make the most sense, while credit card travel protection is best for budget-conscious travelers with low coverage needs.