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Early Bird Strategies
Featured in "Forever Young" July/August 2001

Traveling without travel health insurance isn’t against the law, but it might as well be. Whether you take short trips or long, the financial consequences of a sickness or accident while out of country are just too high for any sane person to take. (For reader’s who enjoy irony, if you are actually insane, you’re not allowed to purchase a policy)

To get a sense of scale, it’s not unusual for the cost of fixing a broken hip and air evacuation home from Europe to exceed $100,000. Complicated procedures are more expensive and procedures in the United States are expensive whether they are simple or not. At the extreme, a complex bypass operation and recovery in the U.S. can be several hundred thousand dollars. On the plus side air evacuation is relatively cheap – A mere snip at $30,000.

For the younger person traveling for shorter periods, the cost of comprehensive coverage is minor, but for the mature traveler who travels for extended periods, the cost can be considerable. And for the unfortunate snowbird with a complex medical history, the cost can be astronomical.

So what strategies can be used to control those costs?

The first strategy is to take a look at the way you travel. Age and health being equal, the daily rate for insuring a six month trip is higher than the daily rate for a three month trip, which in turn is higher than for a 30 day trip. Each company is slightly different, but organizing trips to take advantage of these breaks is an excellent strategy and the savings can be substantial. So if you are considering 6 months down in Florida, consider coming back at Christmas…you may find that the savings is more than the cost of a cheap flight home to see the grandkids.

Another strategy is to take advantage of “Early Bird Specials”. Generally speaking, insurance companies “adjust” their rates on or around Labor Day. Theoretically, of course, rates could go down during this “adjustment however, given the fact that medical inflation (the rate at which medical costs increase) is running at around 20% or more, most experts believe that this is extremely unlikely. Notwithstanding the adjustment, many companies also rely on investment income to offset their costs, and so they offer incentives to clients who “invest” in travel insurance early.

Avoiding a hefty price increase or taking advantage of a specific early bird special, can knock hundreds of dollars off the cost of insurance.

Buying early is not without risk. There is a possibility of rates going down for certain categories, particularly younger, healthier snowbirds. There is also the possibility of a “new” insurance player entering the marketplace and using bargain basement rates to capture market share.

There is a sane way of playing this game of brinkmanship and minimizing the risk. To do so, you should understand some of the rules that are peculiar to the travel health insurance industry. Firstly, if it is a pure health insurance product (meaning health coverage only - no trip cancellation coverage) there is usually a “ Right of Rescission.” In plain language, this means that you are given a certain amount of time to review the insurance policy after purchasing it. If you cancel during this period, there is generally no penalty. Even though you have time to review, once the insurance company has accepted your money and issued the policy…they are committed. So long as you haven’t lied or left something important out of your application, they must cover you at the price quoted. Even if prices later go up, you are “Gandfathered” in.

This requires careful timing, since when you go past the “free look” period, then you are committed too and can only cancel the policy under certain conditions (like being too sick to travel). Canceling because you found a better deal somewhere else is allowed however, the penalties usually offset any savings.

This may seem like a lot of mucking around to save a few dollars, however, for some people, it’s not a few dollars, it’s more like a few hundred dollars, particularly if these two techniques are combined.

One exception: Travelers who have pre-existing conditions should be very cautious and perhaps even avoid early-bird specials. The reason being that the length of time that a medical condition has been stable directly affects the price of the insurance. Unfortunately, these stability periods relate both to the time of departure and the time of purchase. This means that those who have relatively unstable conditions should wait until they have achieved the maximum length of stability possible before buying.

Regardless of one’s state of health, don’t forget that you can control costs by an awareness of the tax implications of coverage. Travel health insurance is considered a pre-paid medical service and the premium may therefore be partially or fully tax deductible. Also, consider that in the event of a claim, any deductible amount that you incur also receives preferred tax treatment.

One last tip: Always deal with an insurance group that is a member of THIA (Travel Health Insurance Association). While it doesn’t guarantee the best price or even the best coverage, it does mean that they agree to a common code of conduct, definitions and professional standards.

 You can obtain multiple quotes by clicking here:
(A free service of Snowbird.Net)