The primary benefit of travel insurance is trip cancellation coverage, which covers the prepaid, non-refundable trip costs in case you need to cancel your trip for a covered reason. Apart from the person’s age, the cost of travel insurance primarily depends upon the trip cost; the higher the trip cost, the higher the travel insurance premium. However, there are many travel insurance plans that allow customers to choose a $0 trip cost.
With a $0 trip cost, travel insurance would still provide many benefits while on a trip, such as emergency medical, dental, AD&D, baggage loss or delay of baggage, emergency medical evacuation, travel delay and so on. However, some coverages won’t be provided due to the insurance effective date change.
How does a $0 trip cost affect the effective date?
When you purchase travel insurance with a trip cost greater than $0, your insurance is effective from the next day of the purchase. However, when you put the trip cost as $0, your insurance would be effective from your trip departure date. So, the actual insurance effective date can determine whether other coverages are included in your policy. While choosing $0 as the trip cost may be a viable option in some circumstances, you should carefully consider these side effects for your planned travel.
Trip Cancellation Coverage
With a $0 trip cost, you will not get the trip cancellation benefit. For some, this isn’t important because they are not worried about cancelling their trip, but if you’re not sure, you should make that decision before choosing a $0 trip cost.
Trip Interruption Coverage
Most travel insurance plans provide trip interruption coverage according to the trip cost. Some provide 100% of the trip cost while others provide up to 150% of the trip cost for trip interruption expenses.
However, if you put $0 as the trip cost, only some plans would still provide trip interruption coverage for reimbursement of the cost of return airfare. Please check the certificate wording of the specific insurance plan for complete details.
Pre-existing Conditions Coverage
Most travel insurance plans exclude pre-existing conditions. To determine what is pre-existing, they have a concept called a pre-existing condition look back period, which is the amount of time (such as 60 days, 90 days, 180 days and so on) prior to the insurance plans effective date that the insurance company will look into for pre-existing conditions.
With a $0 trip cost, even if you bought the travel insurance well in advance of your trip, if you were to experience a medical condition prior to your trip, it would be taken into account during the look back period. This can have a significant impact on whether a specific medical situation would be covered or not.
You are going for a cruise in December, you book your trip in March, and you buy the travel insurance around the same time you booked your trip.
In the scenario where you had purchased coverage with a non-zero-dollar trip cost, your travel insurance would be effective in March, the day after you purchase coverage. If the travel insurance plan you chose has a 2 month look back period, they would only look back at what happened to you in January and February. So, if you were to have a medical situation in November and you recover before your trip and then experience the same situation again while on your trip in December, it would not be considered a pre-existing condition because it occurred during the effective period of coverage.
On the other hand, if you experience a medical situation before you leave on your trip with a $0 trip cost, your travel insurance coverage will not be active, so it would be considered a pre-existing condition and it would not be covered if you experience the same medical situation while on your trip.
You’re buying insurance to protect yourself. While you can buy travel insurance with a $0 trip cost, you lose potentially valuable benefits by choosing this option. So, you need to consider how it could affect you because only you can decide how much risk you are comfortable taking. If you are risk averse it’s better to have more coverage. In this case, you should be sure to add your actual trip cost so you can maximize the coverage available in the travel insurance plan you choose.
If you are not really interested in the trip cancellation benefit, you could put $1 as the trip cost, or you could also consider purchasing travel medical insurance, which typically has a lot more options in terms of the medical policy maximum & deductible, and may be more suitable for your needs and preferences. Most travel medical insurance plans provide the trip interruption benefit as well.
Whichever type of insurance fits your situation best, you can get a quote, then compare multiple plans side-by-side on this website. For any plan you are considering, you can read the policy documents to gain an understanding of what is covered before deciding on the plan for you. We are here to help if you have any questions, so please do contact us for assistance when you need it.