Tag: Vacation

Buying Travel Insurance in Canada

If you’re traveling abroad, you definitely want to buy good Travel Insurance. At least that’s what all insurance companies tell us. Vast majority of people who buy travel insurance waste money on it, however those few who do get involved in an accident or become severely sick abroad would be in lifetime debt had they not bought the insurance prior to the trip. Buying travel insurance is obviously a big deal and an important decision to make prior to the trip. I faced the same issue myself – where do I go to buy best travel insurance in Canada?

Savvy travellers know that most travel insurances offered along with travel packages are a major rip off. Each time you buy a travel insurance along with the vacation package, you are overpaying hard core. This is somewhat understandable as majority of mainstream travel agencies sell mostly sun vacations which are so competitive, they are priced very low and deliver minimal mark-up. If travel agencies were to sell nothing but those popular vacation packages, they would not stay afloat for a very long time. Luckily there are travel insurances and that’s where they get you. While mark-up on popular vacation packages is minimal, mark-up on travel insurances most people buy along with the vacation is outrageous.

It is no different than extended warranties for electronics. It’s only thanks to those that big box stores are able to sell laptops and other gadgets for so cheap. So I’m OK with the fact that most people allow themselves to get ripped off on extended warranties or travel insurances. I’m one of the few who don’t fall for this but the reason I can get away with it is because majority of populace does get ripped off on overpriced travel insurances so travel agencies do have a buffer to work with and can let one person slip without buying one every once and again.

Here’s a comparison:

If you buy a Vacation to the Caribbean (Cuba or the Dominican Republic, for example) in Canada, the weeklong, all-inclusive package will cost you on average $800 plus taxes. Travel insurance for your weeklong stay will start at $80 and will go up to some $130 for a more complete package. You easily end up paying 10% or more of the cost of your all inclusive stay on top of the vacation for your travel insurance that covers you for a week.

Your other option is to call Blue Cross Canada and buy an annual insurance from them for the cost of $68 (in Alberta, not sure about other Canadian provinces and territories). This insurance covers your first 30 days of any stay abroad you take within a year from the validity of your insurance. That means that if you travel abroad let’s say 6 times a year and each of your stays is 30 days long or shorter, then this one time payment of $68 for the travel insurance covers your each trip.

If you didn’t buy this Blue Cross coverage, but instead purchased insurance individually each time you travel, you would be looking at a combined cost of $600 or more ($100 on average for each of your six trips, however if you take 30 day trips, the cost of insurance would be higher. $100 is typical for a one week vacation).

Photo: My Blue Cross Canada Travel Insurance Card for 2010/2011
Photo: My Blue Cross Canada Travel Insurance Card for 2010/2011

There are some terms of service associated with the Blue Cross travel insurance, for example that it doesn’t cover travel through war zones or other areas with advisories against travel to these areas issued by Foreign Affairs of Canada (published on voyage.gc.ca) so you do need to review it before purchasing, however for a normal travel through save and somewhat safe country, Blue Cross insurance covers you perfectly well for the initial 30 days of your stay abroad.

This is what I went with to Cuba, Dominican Republic and Iceland and since I still had 5 months of Blue Cross insurance left, I didn’t buy any additional coverage. I thought that my strategy would be to leave the country and move to another country after a month. Most tourist visas are valid for a month only anyway so unless you extend, you would end up leaving the country anyway. This way I’d be covered with my Blue Cross for the duration of following 5 months.

I remained opened to the possibility of buying health insurance from one of the insurance providers available in a country where I would decide to stay for an extended period of time. It only made sense that buying health coverage from Canada to insure me in a third world country would be expensive. But buying the same insurance from an insurance company that operates in that very country should offer the same type of coverage, but be noticeably less expensive to buy. And that was my plan when I was leaving for the long term travel. I didn’t have any solid travel insurance to cover me no matter what because I didn’t have the amount of money they cost. But I did have it figured out reasonably well to remain covered in case poop hits the fan.

Longer Vacation is Cheaper – Explained

When I took a trip to Iceland, I was able to balance the total cost of it to a point that even though it’s one of the most expensive countries in the world, I only spent a little over $1,500 for 10 days, which included return plane tickets from Edmonton to Reykjavik and back, car rental for the duration of my stay, entrance fees to attractions which count as some of the most expensive in the world, food, drink, gasoline, lodging and all other associated costs. Yet despite my ability to get the most out of the trip for an unbeatable price, compared to my previous trips to Cuba and the Dominican Republic, the trip ended up being almost twice as expensive. Sure, the distance was significantly longer and country is significantly more expensive. However, after I have returned, I realized that an entire trip would have cost me way less, had I spent 1 month in the country, instead of original 10 days. Yes, what I’m saying is that longer vacation is cheaper. How is that possible? Let me explain.

Looks at it this way – if you take your normal vacation by using the vacation time allocated to you by your employer, you will leave for your destination while keeping arrangements with your current residence in your home country. That means that if you are renting a house, you will have to pay your monthly rent regardless of whether you are at home or gone on vacation. If you are a home owner, your property taxes will apply regardless of whether you are in the house or not. And if you live in Canada, the ridiculously high delivery and administration charges added to your power bill will be applied regardless of whether you have used any electricity, or not. I don’t know what it’s like in other countries, but in Canada the amount of money you are charged for electricity used is often less than delivery and administration charges. In my particular case, the power bill for the apartment where I was staying when I took the trip to Iceland totalled up to about $50 a month. Out of which, only about $5 were actual electricity usage charges. Epcor likes to bump up your power bill with their own charges which are so inadequate, I don’t understand how it’s not illegal and how they get away with ripping people off like this.

On top of your rent and electricity, you also have the internet, cable TV, mobile phone, and whatever other month to month bills apply to you. These you will pay for normally even if you have not been in the country half of the month. So basically – if you cancelled all of it, you would end up with positive four digit figure which would easily be enough to extend your vacation to last a month.

If I made arrangements with my landlord that I would move out of the apartment on the day I was leaving for Iceland, I wouldn’t have to pay my $850 a month which would be more than enough to sustain my stay in the country for extra 2 or three weeks. If I also cancelled the electricity and the internet, and if I temporarily suspended my cell phone number, I’d be looking at a thousand dollars saved.

It really made no sense taking a 10 day vacation in Iceland. While I was there, in one of world’s most expensive countries, the money for amenities in Canada was being paid out of my pocket even though I wasn’t using any of it. Rent for an apartment where I was not staying was paid yet I had to cover for my lodging in Iceland. In other words, I was paying rent for two places at the same time, while I could physically only be in one.

The lesson I have learned, was that one of the keys to frugal travel is to book your vacation and make arrangements in your home country for a month. One week or two week vacation ends up being a costly endeavour which is why so many people either can’t afford it, or can only take one or two a year. It’s simply because you are wasting a lot of your money on things you are not using and end up covering for two simultaneous services while only using one at a time.