When does it make sense to buy travel insurance?
Q: I’m going on vacation to the Caribbean this summer. Is it a good idea to buy travel insurance? What should I look for in a policy?
A: Travel insurance can be valuable if you would lose a lot of money in nonrefundable airfare tickets and resort deposits if you had to cancel your trip. More importantly, it can pay for medical evacuation, which is expensive and usually isn’t covered by health insurance, if you are sick or injured while traveling and need to be transported to a hospital.
If this is an expensive trip of a lifetime and/or you’ll be hiking, snorkeling or having other adventure experiences, then it’s smart to consider a policy.
Travel policies often cost 4 percent to 10 percent of your total trip cost, says Steven Benna, of Squaremouth.com, where you can compare policies.
Most policies will reimburse you for nonrefundable deposits if you must cancel or interrupt your trip because of weather or because you or a family member becomes ill. (Most policies won’t cover pre-existing health conditions that were diagnosed or changed, typically within 60 to 180 days before you bought the insurance.)
You will be traveling to the Caribbean during hurricane season, so review the storm coverage. Many policies pay if flights are grounded for 24 hours or if the hotel is uninhabitable. If you want to play it safer, you can find insurers that will reimburse you if a hurricane warning is issued within 24 or 48 hours of your trip, says Julie Loffredi, of InsureMyTrip.com, which allows you to compare policies.
Squaremouth recommends buying $100,000 in medical evacuation coverage for international trips, or $250,000 if you’re going on a cruise or to a remote spot.
You also should check to see if your credit card includes travel insurance as part of its benefits. Chase Sapphire Preferred, for example, offers trip cancellation/trip interruption coverage, up to $10,000 per trip. Some cards offer lost luggage reimbursement and reimbursement for expenses if there are delays.
Q: I understand that the new tax law changed the deadline for repaying a 401(k) loan if you leave your job. How much time do borrowers now have?
A: The new and extended deadline to repay the loan and avoid taxes and penalties is the due date of your tax return for the year you leave your job. Before, you had to repay the loan within 60 days of leaving your job to avoid taxes on the money, plus a 10 percent penalty if you left before age 55.
If you file an extension for your tax return, you’ll have until Oct. 15 of the year after you leave your job to repay the loan without penalties or taxes.
Kimberly Lankford is a contributing editor to Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.
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