Pre-Existing Coverage Calculation

[Bgwest]

Hi Steve, I'd like to dig a little deeper into buying with pre-existing coverage in mind. Let me construct a scenario:

 

Let's say I book a cruise on June 1, 2020 with a sailing date of June 1, 2021. For this booking I put down a deposit of $200 (either cash or FCD). Let's stipulate that the deposit is 100% refundable until 90 days before the sailing date. 

Let's also say that I independently book a pre-cruise hotel for the night before sailing and the booking is guaranteed but is cancellable until the day before the cruise. 

Let's also say that I purchase a water package, a drink package and a bunch of tours directly from the cruise line. Let's stipulate that any and all of these purchases are cancellable until a week or so before the cruise sails. 

Let's add a reservation for independently provided pre and post cruise transportation to and from the airport. Let's stipulate that I've provided a deposit and that deposit is 100% refundable until the day before pickup at the airport. 

Lastly, let's assume that I purchase air transportation (either independently or through the cruise line) that is 100% refundable until just prior to sailing.

 

Consider that all of the above takes place on June 1, 2020. At the completion of all of this activity, I'm out of pocket zero dollars that are non-refundable. I can cancel any single item above, or all of them, and not incur a dime out of pocket. The first moment I've actually committed any money which I cannot retrieve without a penalty is when the cruise deposit goes past the 90 pre-cruise mark. At that moment, I've committed $200 that I will not get back if I cancel.  

 

Assume my intention is to buy a travel insurance policy (let's use Travel Insured WW Trip Protector as an example) that I want to provide me with coverage for pre-existing conditions and that policy has a 21 day window after the first payment has been made to lock in pre-existing condition coverage. 

 

Considering all of the above, by what date must I contact you to purchase this policy?

21 days from June 1, 2020 is, of course, June 22, 2020. But with the idea in mind that I've really not "spent" any money until the deposit is forfeited (90 days prior to sailing), don't I really have 21 days after the deposit is forfeited (or maybe paid to the cruise line might be a better word)?

 

Very much "in the weeds" I'll grant you but something that I've been thinking about for some time but have just never thought to ask.

 

Thanks,

Bill 

[iamtrustworthy]

On 6/19/2020 at 2:53 PM, Bgwest said:

Hi Steve, I'd like to dig a little deeper into buying with pre-existing coverage in mind. Let me construct a scenario:

 

Let's say I book a cruise on June 1, 2020 with a sailing date of June 1, 2021. For this booking I put down a deposit of $200 (either cash or FCD). Let's stipulate that the deposit is 100% refundable until 90 days before the sailing date.

 

Let's also say that I independently book a pre-cruise hotel for the night before sailing and the booking is guaranteed but is cancellable until the day before the cruise. 

 

Let's also say that I purchase a water package, a drink package and a bunch of tours directly from the cruise line. Let's stipulate that any and all of these purchases are cancellable until a week or so before the cruise sails. 

 

Let's add a reservation for independently provided pre and post cruise transportation to and from the airport. Let's stipulate that I've provided a deposit and that deposit is 100% refundable until the day before pickup at the airport. 

 

Lastly, let's assume that I purchase air transportation (either independently or through the cruise line) that is 100% refundable until just prior to sailing.

 

Consider that all of the above takes place on June 1, 2020. At the completion of all of this activity, I'm out of pocket zero dollars that are non-refundable. I can cancel any single item above, or all of them, and not incur a dime out of pocket. The first moment I've actually committed any money which I cannot retrieve without a penalty is when the cruise deposit goes past the 90 pre-cruise mark. At that moment, I've committed $200 that I will not get back if I cancel.  

 

Assume my intention is to buy a travel insurance policy (let's use Travel Insured WW Trip Protector as an example) that I want to provide me with coverage for pre-existing conditions and that policy has a 21 day window after the first payment has been made to lock in pre-existing condition coverage. 

 

Considering all of the above, by what date must I contact you to purchase this policy?

21 days from June 1, 2020 is, of course, June 22, 2020. But with the idea in mind that I've really not "spent" any money until the deposit is forfeited (90 days prior to sailing), don't I really have 21 days after the deposit is forfeited (or maybe paid to the cruise line might be a better word)?

 

Very much "in the weeds" I'll grant you but something that I've been thinking about for some time but have just never thought to ask.

 

Thanks,

Bill 

Hi Bill,

 

Thanks for asking in great detail. My answers only apply to trip cancellation plans that require you to insure 100% of your per person prepaid, non-refundable trip costs including airfare.

 

> Considering all of the above, by what date must I contact you to purchase this policy?

 

June 22, 2020 is the last day you have to buy a plan with a 21 day deadline if the company defines the deadline as 21 days after the Initial Trip Deposit Date. The Travel Insured WTP does it this way.

 

The way the insurance company defines the deadline is an important, but obscure detail. When you are buying close to the deadline, be sure you understand exactly how the insurance company counts the deadline days. A normal person counts the Initial Trip Deposit Date as Day Number 0 (zero), but some policies count the Initial Trip Deposit Date as Day Number 1 (one), which means you will miss the deadline if you are counting like a normal person.

 

Adding to the confusion, many companies don't define the term "Initial Trip Deposit Date". The reason I know what the deadlines are is I asked each of my companies. And, every time a company makes any change to their coverage I ask again.

 

> don't I really have 21 days after the deposit is forfeited (or maybe paid to the cruise line might be a better word)?

 

No. A typical definition of Trip Cost (though not all companies have clear definitions) is this:

 

"Your trip costs are: any prepaid trip costs that are subject to cancellation penalties or restrictions you pay prior to your departure and before something happens to cause you to cancel your trip."

 

I cover this in detail on this page:

https://tripinsurancestore.com/what-is-your-trip-cost/

 

> I independently book a pre-cruise hotel for the night before sailing and the booking is guaranteed but is cancellable until the day before the cruise.

 

I have a question about this one: Are you prepaying this one night?

 

If so, you must include it if you forfeit your prepayment if you cancel your trip.

 

If not, you don't have to insure it because it's not prepaid. However, some companies, but not all, allow you to insure this if you would be charged for the one night should you cancel your trip for a covered reason less then 24 hours before you arrive.

 

> I purchase a water package, a drink package and a bunch of tours directly from the cruise line. Let's stipulate that any and all of these purchases are cancellable until a week or so before the cruise sails.

 

This is the same answer as the hotel question if you forfeit your prepayments if you cancel your trip.

 

> I purchase air transportation (either independently or through the cruise line) that is 100% refundable until just prior to sailing.

 

I have a two questions about this one:

 

1) Is there any point in time before you leave home that the airfare is non-refundable?

2) Does your flight back home become non-refundable when you take the outbound portion?

 

If your intention is to insure the money as you pay it, you may do buy the policy and add on later. When your trip is farther in the future and you are paying it in stages, an option to consider is this:

You would not have to pay for the insurance in full immediately upon purchase in order to get the pre-existing conditions coverage. Many, but not all, plans allow "pay as you go" which means you must insure your deposit(s) now and as you prepay more trip costs, you must increase the insurance coverage any time (as long as nothing has happened where you would file a claim) before but not later than 10 - 21 days (depending on the plan) of adding any additional trip costs above what has been insured to keep the pre-existing conditions coverage. This generally does not result in any extra costs, just the incremental price increases. I won't knowingly allow someone to buy a plan that re-calculates the price when adding trip costs. You do have to insure the deposits even if they are refundable.

 

The prices are locked in at your ages and the rates that were in effect when you bought it.

 

I hope this makes sense. I hope you or anyone else has more questions about this example.

 

Steve Dasseos

Edited June 20, 2020 by iamtrustworthy
typo

[Bgwest]

You've cleared up my principal concern, that of the pre-existing clock starting upon payment of the Initial Trip Deposit. Your response to that part of the scenario is:

>"June 22, 2020 is the last day you have to buy a plan with a 21 day deadline if the company defines the deadline as 21 days after the Initial Trip Deposit Date. The Travel Insured WTP does it this way".

If TI WTP defines their insurance contract this way (key phrase "after the Initial Trip Deposit Date), no further discussion is needed. I've always gotten myself confused over the fact that even though I pay a deposit on the Initial Trip Deposit Date, that money is generally refundable (unless it is specifically noted as non-refundable) up to a defined point in the future. 90 days in my scenario above. So even though the deposit is refundable and "not subject to cancellation penalties", the act of making this deposit starts the clock running. Got it. 

>"Your trip costs are: any prepaid trip costs that are subject to cancellation penalties or restrictions you pay prior to your departure and before something happens to cause you to cancel your trip."

 

 

 

>(Hotel) I have a question about this one: Are you prepaying this one night?

>If so, you must include it if you forfeit your prepayment if you cancel your trip.

Sometimes I'll make a prepayment that is refundable, sometimes it is non-refundable. 

If the prepayment is refundable, then I do not include it in the prepayment calculations.

If the prepayment is NON-refundable, the I include it in the prepayment calculations.

Same is true for purchases from the cruise line as in my scenario (water, drinks, tours, grats, etc). If they are refundable they are NOT included in the prepayments calculations and if NON-refundable I include it in the prepayment calculations?

Have I got all of this right?

 

>1) (Airfare)  Is there any point in time before you leave home that the airfare is non-refundable?

>2) Does your flight back home become non-refundable when you take the outbound portion?

When (rather if) I happen to buy a fully refundable ticket from an airline, then that amount is not included in the prepayment calculations. Princess EZAir for example is fully refundable up to 45 days prior to departure. 

When I buy a non-refundable airline ticket then that amount IS included in the prepayment calculation. 

Have I got all of this right?

 

Regarding the pay as you go strategy, you've trained me well. That's all that I've been doing since you and I first discussed it. 

 

Again, this stuff is really down in the weeds but stuff I think about. 

 

Thanks!!

Bill

 

 

 

[iamtrustworthy]

On 6/27/2020 at 3:28 PM, Bgwest said:

You've cleared up my principal concern, that of the pre-existing clock starting upon payment of the Initial Trip Deposit. Your response to that part of the scenario is:

>"June 22, 2020 is the last day you have to buy a plan with a 21 day deadline if the company defines the deadline as 21 days after the Initial Trip Deposit Date. The Travel Insured WTP does it this way".

If TI WTP defines their insurance contract this way (key phrase "after the Initial Trip Deposit Date), no further discussion is needed. I've always gotten myself confused over the fact that even though I pay a deposit on the Initial Trip Deposit Date, that money is generally refundable (unless it is specifically noted as non-refundable) up to a defined point in the future. 90 days in my scenario above. So even though the deposit is refundable and "not subject to cancellation penalties", the act of making this deposit starts the clock running. Got it. 

 

>"Your trip costs are: any prepaid trip costs that are subject to cancellation penalties or restrictions you pay prior to your departure and before something happens to cause you to cancel your trip."

 

 

 

>(Hotel) I have a question about this one: Are you prepaying this one night?

>If so, you must include it if you forfeit your prepayment if you cancel your trip.

Sometimes I'll make a prepayment that is refundable, sometimes it is non-refundable. 

If the prepayment is refundable, then I do not include it in the prepayment calculations.

If the prepayment is NON-refundable, the I include it in the prepayment calculations.

Same is true for purchases from the cruise line as in my scenario (water, drinks, tours, grats, etc). If they are refundable they are NOT included in the prepayments calculations and if NON-refundable I include it in the prepayment calculations?

Have I got all of this right?

 

>1) (Airfare)  Is there any point in time before you leave home that the airfare is non-refundable?

>2) Does your flight back home become non-refundable when you take the outbound portion?

When (rather if) I happen to buy a fully refundable ticket from an airline, then that amount is not included in the prepayment calculations. Princess EZAir for example is fully refundable up to 45 days prior to departure. 

When I buy a non-refundable airline ticket then that amount IS included in the prepayment calculation. 

Have I got all of this right?

 

Regarding the pay as you go strategy, you've trained me well. That's all that I've been doing since you and I first discussed it. 

 

Again, this stuff is really down in the weeds but stuff I think about. 

 

Thanks!!

Bill

Hi Bill,

 

Yes, you are right in everything.

 

I want to add this about the airfare. Many times people will tell us "I got a Southwest ticket so I'm not including it because I can change it without penalty" or something similar with another airline.

 

For the companies that require 100% of the per person prepaid, non-refundable trip cost be insured, the cost of the Southwest tickets must be included because they are not refundable.

 

Steve

[SusieQft]

1 minute ago, iamtrustworthy said:

For the companies that require 100% of the per person prepaid, non-refundable trip cost be insured, the cost of the Southwest tickets must be included because they are not refundable.

They require that you insure the Southwest tickets, but then if you cancel your trip you have a voucher for a future flight.  I thought that they would not reimburse the cost of the flight in that case?  So what is the insurance covering?

[iamtrustworthy]

Just now, SusieQft said:

They require that you insure the Southwest tickets, but then if you cancel your trip you have a voucher for a future flight.  I thought that they would not reimburse the cost of the flight in that case?  So what is the insurance covering?

Hi SusieQft,

 

If you cancel your trip for a covered reason, you can tell the insurance company that you are giving up your right to use the future airline credit and take the cash payment instead. Some companies have a form called the "Air Authorization Form" that covers this subject.

 

Steve