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Trip-cancellation insurance is one of those financial products that makes some sense but seems totally skippable. And then came coronavirus, which is causing people to cancel trips to affected areas like Italy.

Trip cancellation is a lot like travel emergency medical insurance. It sounds great in theory, but making claims is tricky because of exclusions and rules in the fine print. For some help on deciphering trip-cancellation insurance, check out a recent post by budget travel blogger Barry Choi.

Mr. Choi points out that there’s a type of travel-interruption insurance called cancel for any reason, or CFAR, but it’s expensive and typically covers only 75 per cent of the cost of a cancelled trip. The regular type of trip-interruption coverage applies for circumstances such as unexpected injury or illness, natural disaster, job loss, cancelled flight or a government travel advisory.

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But even in these cases, you can’t assume you’re covered. CBC reports that two companies offering travel-interruption insurance no longer cover new customers who cancel trips in response to the outbreak of coronavirus. CBC says people with regular trip-cancellation insurance have generally been able to get reimbursed if, after booking travel, the federal government issued a coronavirus-related advisory government to avoid non-essential travel to their destination.

Mr. Choi says he considers travel insurance, including trip interruption, to be a must when traveling. If you’re travelling in the months ahead, just make sure that the trip cancellation policy you buy will cover you if your cancellation was related to coronavirus.

Subscribe to Carrick on Money

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.

Rob’s personal finance reading list…

Investors, you need to answer these questions right now

If you’re stressed by the recent stock market volatility, work your way through these sensible, straightforward questions to see if change in your investments is needed.

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How to recession-proof your finances

The hefty interest rate cuts by the Bank of Canada and the U.S. Federal Reserve last week tell just how much concern there is about the economy falling into a recession. Some thoughts here on how to prepare your finances so you ride through any turbulence ahead.

The best cost-efficient bathroom upgrades

No. 1 on this list is a better showerhead – “few bathroom upgrades offer so much life improvement for so little effort.”

Your tax return is not free money

U.S. personal finance journalist Beth Kobliner mediates a dispute between spouses over a tax refund. She wants to spend the money on a much-needed vacation, while he wants to put the money toward a bathroom reno. Ms. Kobliner makes the point that tax refunds are not a windfall – they’re a refund of an overpayment of taxes. So spend them wisely.

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Ask Rob

Q: I recently read your newsletter on preparing for a recession, which I found extremely interesting and enlightening in today's hectic and volatile investment environment. I have shares in the iShares Diversified Monthly Income ETF (XTR), which provides me a pretty steady monthly income. Distributions are re-invested monthly. The recession article suggests having five years’ worth of cash flow needs at the beginning of retirement in bonds, bond funds and cash on hand. Would you consider these shares in XTR as qualifying for this category? I am two to three years away from full retirement.

A: No, XTR is not like holding cash. The price of XTR could fall in a stock market correction, and the monthly income payments could decline as well if one or more of the fund’s holdings cut their dividend payments. Consider XTR’s distributions as being reliable on the whole, but not as solid as holding cash.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

Tax tips for people who bought or sold a home in 2019 from the Canada Revenue Agency.

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What I’ve been writing about

More Carrick and money coverage For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group. Send us an e-mail to let us know what you think of my newsletter. Want to subscribe? Click here to sign up.

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