Is An Annual Plan Right For You?

For the frequent vacation traveler it's natural to ask if there's a way to buy coverage on an annual basis to cover as many trips as you decide to take. It is possible -- some insurers have long offered annual multi-trip plans that can provide benefits such as travel delay, medical, and emergency evacuation. These plans are especially useful for the frequent business traveler. But what about the leisure traveler?

If a leisure traveler really isn't too concerned with trip cancellation and trip interruption coverage these annual plans can be a good option. But what about those that do need cancellation and interruption coverages? The problem that arises is that the insurer doesn't know beforehand how many trips the traveler will take in that one year period and doesn't know how much those trips will cost and consequently what the risk of loss will be. Is the traveler going to make a few trip to Vegas at about $1000 each or will she be taking four luxury cruises at $6000 each? It's impossible to come up with a reasonable premium without this information up front.

Most annual plans will include a minimal amount of trip cancellation/interruption coverage included in the base premium -- typically $1000 to $1500. Some will then allow you to purchase additional cancellation coverage on a trip-by-trip basis. For example, Travel Guard lets you add the coverage on for 6% of the additional trip cost.

Be very careful when evaluating the various coverages. You need to know if each individual benefit amount is "per year" or "per trip". For example, the baggage delay benefit may apply to each trip no matter how many times you have to make a claim against it during the year. It "reloads" at the start of every trip. But the trip cancellation and other benefit limits are probably going to be on an annual basis. Perhaps your policy has a $1500 cancellation benefit. You've got three trips planned, each costing about $1000 that's non-refundable. You get sick and cancel the first one and get your $1000 back from the insurer. Your remaining benefit amount is now $500.

Another common aspect of the annual plans is that they generally don't offer a waiver of their pre-existing condition exclusion so be careful of that. And quite often their maximum benefits for medical and emergency evacuation coverage can be lower than what you'll typically find on a single-trip plan.

Be realistic when figuring out if there's any cost savings to be had with these plans. Travel Guard and Access America both price their plans at about $250 for the year. For that same traveler with the three $1000 trips it's probably about a toss-up when comparing one annual plan vs three individual plans depending on your age. More trips? Fewer trips? Older? Younger? Less expensive trips? More expensive trips? Greater need for pre-existing condition coverage? Those all have to be taken into account before buying an annual plan.

travel insurance basics