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Life Health > Running Your Business

Cancel and Interruption for Any Reason Coverage

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What You Need to Know

  • The COVID-19 pandemic made business travel much less predictable.
  • Travel insurance can now protect you against trip interruptions as well as cancellations.
  • IFAR benefits help with changes you make, rather than changes travel services providers make.

Throughout the last few years, the significant changes in travel have altered the life and annuity advisor travel landscape we once knew.

The ongoing effects and uncertainties of the COVID-19 pandemic and new variants remain, as well as the war abroad and the fears that it could spread.

Financial services firms’ clients have experienced increased volatility.

Firms like yours may have encountered more uncertainty in connection with their own operations.

As the world remains in a state of flux when it comes to travel, how can financial services firms move forward with travel plans while ensuring their employees’ trips are well protected?

To help with difficult travel situations, the travel insurance industry offers optional benefits to allow cancellation or interruption of travel for any reason not otherwise covered: cancel for any reason (CFAR), and a newer benefit, interruption for any reason (IFAR).

At Seven Corners, which is a travel insurance provider, we offer both coverage options.

Our team has experienced an increase in calls from travelers asking about CFAR and IFAR as well as an increase in the popularity of these options.

In fact, we saw a 180% increase in the sale of plans with CFAR in 2020 compared to 2019, and due to the continued uncertain nature of travel, we continue to see increased purchases of CFAR compared to what was observed prior to the pandemic.

Due to the questions about these benefits and the coverage they provide advisor travelers during unforeseen circumstances, our team put together information on what CFAR and IFAR are, what they cover, and how adding these options might be useful when planning a trip to visit a major client or attend an industry conference.

What is CFAR?

CFAR is an optional benefit offered on certain trip protection plans that allows travelers to cancel trips for any reason not otherwise covered.

With it, customers can be reimbursed for up to 75% of their nonrefundable trip costs if the CFAR benefit is purchased within 20 days of the initial trip deposit.

Travelers must also insure subsequent travel arrangements added to their trip within 15 days of the date they purchase them.

For example, if a traveler needs to extend their trip for a new conference presentation, they could add the additional expense for the conference and increased airfare within 15 days of the date they paid for each of them.

It is important to remember CFAR covers nonrefundable trip expenses; if a trip cost is refundable, there is no need to insure it.

It is also important to note that CFAR does not cover travel arrangements which are not provided by the travel supplier or the failure of the travel supplier to provide the travel arrangements due to cessation of operations for any reason.

This is because CFAR was designed for travelers to cancel their trip for any reason they wish, not because a travel supplier causes them to cancel.

Examples of When CFAR Would Be Helpful

Here are examples of situations where CFAR could help business travelers:

  • Employees are concerned about a new variant of COVID-19 at their destination and want the option to cancel their trip if transmission rates rise, and they no longer feel safe traveling.
  • A single-parent employee is having difficulty finding a caregiver for her children when she travels for business, and she is concerned she may have to cancel her trip if she cannot find a reputable person to care for her children before her next trip.

Additionally, if a business traveler wants the option to cancel a trip because of the current war in Ukraine, they could utilize CFAR, the only option available to obtain coverage for cancellations due to war.

Their reason for canceling a trip could include, but is not limited to, fear of travel due to the war.

Travelers should review the plan document for their state of residence for the requirements to purchase and make a CFAR claim.

What is IFAR?

IFAR is an important option for coverage plans in today’s travel climate as it gives travelers the option to interrupt their trip once it has already begun.

It is an optional benefit that reimburses up to 75% of unused and nonrefundable insured trip expenses.

It can also cover additional transportation costs to join a trip if a traveler leaves after their scheduled departure date, rejoins their trip from the point they interrupted it to the next scheduled destination, or travels to their originally scheduled return or final trip destination.

There are several requirements for IFAR, as it expands coverage for trip interruption beyond the list of covered reasons.

For example, IFAR is not typically available if the trip is not more than two days, because travelers must interrupt their trip 48 hours or more after their scheduled departure date.

Additionally, travelers must buy IFAR within the stated time; this is typically within 20 days of the date the initial trip deposit was made.

The availability of optional benefits like IFAR is one of the many reasons it is important to buy travel insurance as soon as possible after the first trip payment or deposit is made.

IFAR does not cover penalties associated with travel arrangements not provided by the travel supplier for the trip and failure of the travel supplier to provide the agreed upon arrangements for the trip for any reason.

The benefit was designed to interrupt a trip for any reason the traveler wishes, not because a travel supplier failed to fulfill their agreement.

To date, we have seen a strong adoption rate for the newer benefit of IFAR, with a little more than 17% of direct consumers choosing to add it to their purchase.

Generationally, our team sees that IFAR is most popular with millennials and Generation X, each having adoption rates of 26% and 28%, respectively.

The addition is least popular with baby boomers, who have an adoption rate of only 12%.

Examples of When IFAR Would Be Helpful

Here are examples of when IFAR could help business travelers:

  • Employees are not comfortable with the steps their hotel is taking regarding COVID-19, and they don’t feel comfortable staying there, so they decide to return home early.
  • Three days after your employee arrives at their destination for a week-long life insurance or retirement services conference, the remainder of the conference is canceled due to a COVID-19 emergency, and they must return home.

Additionally, if a traveler wants the option to interrupt their trip because of the current war in Ukraine, they could utilize IFAR, the only way to secure coverage for interruptions due to war.

Their reason for interrupting a trip could include, but is not limited to, fear of travel due to the war.

As with CFAR, travelers and businesses should review the plan document for their state of residence for the requirements to purchase and make an IFAR claim.

Why CFAR and IFAR?

These options were added to plans to provide improved coverage for customers in response to unpredictable events that can affect travel plans the way COVID-19 did.

What’s the Difference Between Them?

Employees should add CFAR to travel plans if they are concerned they may need to cancel the trip before they’ve departed, and CFAR typically requires that the cancellation takes place 48 hours or more before the scheduled departure date.

IFAR comes into play after an employee has already departed on the trip but no sooner than 48 hours after departure.

What Do CFAR and IFAR Cost?

Travelers can expect most CFAR benefits to increase trip insurance costs by 40% to 50% because the plan now includes much wider coverage for trip cancellation.

IFAR is a less expensive option, typically increasing the price of a trip protection plan by 10% or less when added.

With CFAR and IFAR, travelers can cancel or interrupt their travel plans for any reason they wish. The increase in price occurs because the insurance company now bears an increased risk.

Both CFAR and IFAR are beneficial travel insurance options for business travelers.

With these flexible benefits, advisors like you have a way to expand coverage for unanticipated cancellations or interruptions that could affect travel plans.

To learn more about how travel medical and trip protection products can address the continuing impacts of the pandemic, visit our coronavirus page.

Angela Boudin (Photo: Seven Corners)Angela Borden is a Seven Corners product marketing strategist. She earlier spent two years at Golden Rule Insurance, and she holds a life, health and annuity producer license in Indiana.




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