Saturday, May 31, 2014

Vacation Insurance? Are You Kidding Me?

Insuring your vacation?  What's next, insuring the toothpaste in your medicine cabinet?

I recently received a plea from a credit card company to sell me vacation insurance.  These people must coordinate with our media overlords, as NBC news recently ran a piece on this as well.

Does travel insurance make any sense?   As this CNN piece notes, if you are planning a "trip of a lifetime" and spending tens of thousands of dollars, then maybe yes.   However, I would argue that even then, travel insurance may be a waste of money.

If you have to pay to insure something, then it had better be something dear to you.   And you have to ask yourself, for your income and wealth status, does owning such an expensive thing make sense?

If you worry about losing a $500 iPhone, then maybe you shouldn't own one.   If you worry about a dent in your fender, maybe you should own less car.   If some physical possession is so expensive, relative to your income or wealth, that you live in paranoid fear of losing it, then maybe you shouldn't own something so expensive.

I have mentioned this before with regard to collision insurance, extended warranties, and the like.   People pay hundreds, if not thousands of dollars a year to insure trivial risks, while ignoring their real liabilities.

A vacation should be a time to relax and have fun.   Yet, for some reason, there are a lot of people in America who believe that you cannot have a good time on vacation unless you are burning through a boatload of money.   Many feel they have to jet off to Bora-Bora and stay in a "resort" with white sandy beaches and have gourmet food and those tropical drinks with little umbrellas.   And they are willing to pay thousands and thousands of dollars to do this.

Why is this?   Well, our old friend status rears its ugly head.   Did you ever notice that the folks who go on vacations like this are sure to mention it to you - and show you photos of how great it all was?

When we went on our ill-fated cruise, I was amazed at how many people lined up to have their picture taken.  Some even had photographers do "photo shoots" of the happy couple, suitable for framing.   I wonder if they really had fun on the cruise, or were just acting out some fantasy to regale their friends with later on when they got home.

What is more disturbing is how many people spend the whole year saving up money to pay for such a trip - or spend the rest of the year paying the credit card debt from such a trip.   Folks think that in order to have fun, you have to be burning through money - just as Rednecks thing that in order to have fun, an internal combustion engine has to be running somewhere, even if it is just a generator or a chainsaw.

I think otherwise.

The expensive vacation is problematic on a number of levels.

First, it is stressful.   If you are spending a thousand dollars a day on vacation (it has been done!) then you feel that you need to be "getting your money's worth" every minute.   Sadly, life does not often cooperate.  You can end up having a headache or being sick, or just not feeling well.   It can rain or be cloudy or cold.   Things can go wrong.   And then you get angry, having spend all this money.   Blowing through money on a vacation is not a relaxing vacation.

Second, it is not real.   Most of these expensive vacations are artificial experiences, where you jet off to an exotic vacation, are picked up by limo, and then taken to a gated exclusive resort, where you never experience anything "real" with regard to the country you are in.   You might as well just go to the Marriott in Ft. Lauderdale and save a lot of money.

Third, you can't afford it.   Yes, you can make the payments on your "vacation loan" and all, but chances are, the money you are blowing through for these vacations is money that should be going into your IRA - or money you should not be taking out so quickly.   Like a leased car, you might think you can afford the monthly payments.  But the overall cost to your net worth can be staggering.   And if you feel that this vacation is so costly that it needs to be insured, then maybe that is saying right there that you can't afford it.

Fourth, very little can really cancel a vacation.   Sure, sometimes things might be delayed a day or two, or you have to change travel plans and do something different that what you planned.   We rented a boat in France, and a storm came through and closed part of the canal.   We chose a different route instead.  Problem Solved.  If disruption of your plans freaks you out that much, maybe you have some sort of mental disorder that needs to be looked into.

We take a lot of vacations - perhaps four months of each year.  It isn't cheap, but then again, it isn't expensive either, as we use our cheap RV travel trailer, or rent a house or a boat with others.   We book cheap flights, and our schedule is such that if something happens, we can roll with the punches, rather than freak out because we "have to be back at work" on Monday.

Since we don't spend a lot on vacation, we can afford to take more of it - and relax more, as we don't feel we are "burning through cash" all the time.

One reason we have shied away from cruises is that they cost about $1000 a day, when you factor in all the costs (flying down there, hotel, taxi, parking, port fees and taxes, liquor bills, entertainment, shore trips, etc.).   It wasn't that fun, in part because it was so expensive.   For the money spent, we felt we should be experiencing a continuous orgasm.   It was not to be - and the staggering cost made it an unpleasant experience.  It seemed that every time you turned around, there was a charge, a fee, or someone with their hand out.   No thanks!

Sadly, this is most people's idea of a vacation - going somewhere and spending money.   If you ain't spending money, you ain't having fun - so they think.   And this is why, in tourist towns, you can make a boatload of money selling crap, as tourists think "this is what we are supposed to do" and that fun begins when you take out your wallet.

How sad.   And what a sad way to live.

Vacation insurance?   I would say no.   And if you are contemplating vacation insurance, then maybe you are spending too much on your vacation!