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Do You Need Travel Insurance For Your Vacation? Here’s What to Know

In this edition of "Bank of Dad", our columnist discusses the ins and outs of travel insurance before walking us through some home renovation comparisons.

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Hey, Bank of Dad, quick question: I’m taking vacation in August with my family. When, if ever, does getting travel insurance actually make sense? Do I need it for every trip? What are the considerations? — Sherrie, Wisconsin 

Sherrie, I think a lot of people are wondering that very thing as they head off for summer vacation. While you may not need it for smaller trips, travel insurance can certainly help you rest easier when you’ve put a consider amount of money into your journey — or if you’re traveling outside the country. And at less than 10 percent of the cost of your trip in most cases, it’s usually a pretty affordable safety net.

Travel insurance offers a range of protections, including trip interruption/cancellation protection — which reimburses you for, among other things, hotel and cruise ship expenses — and travel medical insurance. Medicare and private insurance plans don’t cover you when you’re overseas, making the former a virtual must-have for international travelers.

Depending on where you visit, you may find that the nearest hospital isn’t exactly a Johns Hopkins. A travel insurance carrier can help you identify the best place to get care, and even help get you there, says Mark Murphy, president and CEO of the travel-focused publishing house travAllianceMedia (and a man with more than a few miles on his personal odometer).

Murphy told me of an employee who set off for Panama, only to have his lung collapse on the flight there. Because he was covered by the company’s travel insurance policy, he was Medevac’d to Miami, where he could get better care — all of it on the carrier’s dime.

“Bank of Dad” is a weekly column which seeks to answer questions about how to manage money when you have a family. Want to ask about college savings accounts, reverse mortgages, or student loan debt? Submit a question to Bankofdad@fatherly.com. Want advice on what stocks are safe bets? We recommend subscribing to the Motley Fool or talking to a broker. If you get any great ideas, speak up. We’d love to know.
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But it’s not just about the quality of the medical facility. Without travel coverage, you may find yourself at a hospital that expects you to pay upfront. “If you go on this great vacation and something like that happens with your kid, you want to make sure you’re not getting hammered financially,” says Murphy.

Do you need insurance if you’re traveling stateside? Perhaps not, if all you’re paying for is a hotel stay. In that case, Murphy says you’re often covered by the hotel’s cancellation policy anyway (though it doesn’t hurt to read the fine print when you make the booking).

One case where insurance can come in handy, though, is if you’re traveling on the road for a few days before arriving at the hotel. Should something happen on the way there, you don’t want to find yourself losing out on a multi-night hotel expense. For folks in that situation, a policy with trip interruption coverage will compensate you for that loss.

You can purchase a policy by either going directly to a carrier like Allianz or Travel Guard, or by visiting comparison sites like Insuremytrip. Murphy likes booking the accommodations and insurance through travel agencies, which typically partner with a third-party insurer. It’s an extra layer of protection, he says. If it turns out that your claim wasn’t handled appropriately, you have recourse to go after the travel agency, too.

But a word to the wise: Buy a policy as soon as you make your travel arrangements. Those who wait until the last minute may find that they’re no longer eligible to buy a plan. And depending on the carrier, your pre-existing conditions may not be covered unless you purchase insurance within 10 to 30 days of booking an overseas trip.

Bear in mind that different insurers have different rules about all this stuff. So hunker down and figure out the details before you sign up. You’ll have peace of mind knowing you’re protected if your vacation takes an unexpected detour. 

Our house needs work — lots of it. Not plumbing or electricity, thank God, but just a lot of general renovations. Does it make more sense for me to do it myself? I can, but it’s going to take years. Or does it make more sense to take the hit and just pay someone now? In any case, how do I calculate return on investment?Jason, Pennsylvania

Assuming the work is done competently, you’re going to get the same bump in home value whether you perform the renovations or someone else does. So, you have to estimate how much it will cost to bring in a professional and make a judgment call whether your time is more valuable than that.

You mentioned that your to-do list doesn’t include plumbing or electrical work, so it sounds like you’re talking about some fairly minor fix-it type of stuff. In that case, you may not need to bring in a licensed contractor, who will charge a premium for their expertise. A competent handyman should suffice for things like repairing a loose rail or installing weather stripping.

According to Home Advisor, a typical handyman will charge around $60 to $65 an hour, though the ones employed by a big company may charge twice that amount. Larger businesses have a lot more overhead, and customers like you have to pay for it. If you can find a jack-of-all-trades who operates their own business and has a long list of good reviews, that might be your best bet.

If you need a little freshening up of your paint, the average interior job for an entire home costs $1,765, based on Home Advisor data (though bigger places will obviously run more). Redoing the outside of your house, meanwhile, will set you back $2,810, on average.

Of course, those are just ballpark numbers. You’ll have to get at least two or three service providers to come by and give you a quote to get a more precise idea of what your bill would be. If the total bill came to $10,000, would it be worth it to hire a pro? You have to think about whether you’d be willing to pay that much to spend the next year or two with your family, rather than sawing lumber or reattaching loose gutters.

It’s a classic example of an “opportunity cost,” the fancy term economists came up with to describe the value of our next-best option in a given situation. If, in your mind, enjoying several weekends out of the year on the golf course or behind the grill is more valuable than the handyman’s bill, let someone else put in the hard work on your behalf.

A quick side note, here. Younger adults, in particular, tend to have a rosy view of how much renovations will increase their home’s resale value. The truth is, homeowners usually only recoup 70 to 80 percent of what they spend, even on bigger projects like kitchen remodels and new windows.

It’s safe to say fixing a few loose kitchen tiles isn’t going to boost the offer price, if a future buyer expects them to be in good shape, anyway. Basic repairs are more about holding on to your property’s value rather than increasing it. But those little projects will certainly help you enjoy your home more, regardless of who actually puts in the sweat work.