Is Travel Insurance Worth It? Evaluating the Value and Benefits

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• Travel insurance covers risks like trip cancellations, health emergencies, and lost luggage.
• Travel insurance costs can range from 4% to 12% of your total trip cost.
• Travel insurance is best for trips that are long, expensive, nonrefundable, and international.

Vacations can be very expensive. If you’re paying a lot for yours, you might wonder if you should purchase travel insurance, especially when some costs are nonrefundable.

The answer isn’t always cut-and-dried. Travel insurance isn’t necessary for everyone. Whether you need it will depend on a variety of factors. Here are some key points to consider when deciding if travel insurance suits you.

Introduction to travel insurance

When planning a trip, it’s essential to think about how you’ll protect yourself from the unexpected. That’s where travel insurance comes in. It can cover various risks like loss of personal belongings, checked baggage, and more. With the appropriate coverage, you can nullify or mitigate the potential losses.

“Plain and simple, travel insurance is a layer of protection against financial loss,” says Brad Cummins, owner and principal agent for Insurance Geek, an insurance comparison platform. “Whether it be lost luggage or a lost passport, travel insurance will cover the extra costs during these unfortunate events.”

Benefits of travel insurance

Protection against unforeseen cancellation

One of the top reasons to acquire travel insurance is to cover potential losses from trip cancellations. When canceling a trip due to a covered cause, travel insurance will reimburse you for prepaid, nonrefundable expenses. 

Some covered causes for travel cancellations include:

• Sickness, injury, or death of traveler or family member of traveler
• Inclement weather
• Unexpected work or layoffs
• Terrorist incidents in a travel location
• Jury duty

Some travel insurance covers trip cancellations regardless of the reason. However, you make certain trade-offs when you enroll in a “Cancel for Any Reason” (CFAR) insurance policy. These policies are more expensive and may only refund a percentage of your trip’s cost. You can find our guide on the best CFAR travel insurance here.

Financial security and peace of mind

While your travel insurance covers any unforeseen issues before your trip, it continues to cover you even after your flight has taken off.

For example, you don’t have to be as anxious at baggage claim when your fellow passengers have claimed their luggage and yours hasn’t come out yet. Travel insurance offers lost luggage protection and can cover any necessary purchases while you wait for your late luggage to arrive, such as toiletries and a change of clothes.

Medical coverage on travel insurance can also offer peace of mind as most US health insurers don’t provide coverage when you’re abroad. A comprehensive travel insurance plan will cover you in an unexpected accident or emergency so you can seek medical attention for an injury sustained while traveling without worrying about mounting medical bills.

Evaluating the cost of travel insurance

The average cost of travel insurance is 5%-6% of your total trip cost. However, the exact cost will vary based on factors such as your age, travel destination, and where you live, and can be as little as 4% of your trip cost or as high as 12% of your trip cost.

If you’re wondering whether travel insurance is worth it, you’re not alone. There are a few things to consider. If an emergency arises on your trip, travel insurance can reimburse part or all of your vacation expenditure. However, this will depend on factors such as your trip type and whether it’s refundable.

Cost vs. potential savings

In general, travel insurance is worth it if you’re concerned about losing money if your trip is called off or delayed or if you’re worried about medical bills while traveling. However, conducting thorough research and understanding the costs and coverage provided is critical before purchasing a policy.

For example, older travelers or those with pre-existing medical conditions may pay more for their insurance. Similarly, those traveling to high-risk destinations or participating in high-risk activities may also face higher premiums. 

Ultimately, it’s important to shop around and compare quotes from different travel insurance companies to find the best coverage and rate for your needs. Read more in our guide for the best travel insurance companies. 

Cost-benefit analysis for different trip types

Travel insurance may be a wise investment if you’ve already paid for your and can’t change or cancel your trip without penalty. Suppose your trip is canceled or disrupted due to a covered cause. In that case, travel insurance will cover the trip’s cost and any other nonrefundable expenditures up to a pre-determined amount.

If you’re heading to a country where your health coverage doesn’t apply, or if you don’t have any health insurance at all, travel insurance might provide the protection you need. Travel insurance can also assist you in case of medical emergencies. It’s vital to understand that not all travel insurance policies are created equal. Be sure to carefully study the details and understand what is and isn’t covered before purchasing one.

Scenarios where travel insurance is essential

Expensive vacations and long-term travel

It’s a good idea to insure trips with a high, nonrefundable price tag because you’ll never forgive yourself if your expensive, once-in-a-lifetime trip gets canceled and your money and planning go down the drain. For these vacations, you’ll want to find a policy that covers 100% of expenses.

Similarly, if you have long-term travel plans, you’ll want to have a policy that protects against travel interruption in case something cuts your plans short. You’ll also want medical coverage during extended stay outside the country.

High-risk destinations and activities

High-risk destinations include regions facing political instability, war zones, and areas prone to natural disasters. Travelers headed to these areas should look into travel insurance in case their trip is canceled due to an unforeseen event. 

Additionally, certain areas are known for the thrilling activities they offer, like skydiving and bungee jumping. If you have extreme sports on your itinerary or believe you might build up the courage to plunge down a canyon, you may want to invest in a travel insurance policy. Keep in mind that some travel insurance policies don’t cover high-risk activities, so shop carefully.

When travel insurance may not be necessary

Low-risk, short, or domestic trips

There are also some situations in which you might not need travel insurance. If you are traveling within the US, you do not need travel insurance for health reasons since most health insurance plans will cover you even if you’re not in your home state. 

Additionally, travel insurance may not be necessary if you’re only traveling over the weekend or exclusively booked refundable experiences.

Making an informed decision

There are a few key considerations when buying a travel insurance policy. The cost of the policy is one factor, but it’s also important to look at the coverage limits and what is included and excluded in the policy. Be sure to read the fine print carefully and compare policies between different companies. 

It’s also important to consider the purpose of your travel insurance policy. If you’re going on a trip where you’ll be doing adventurous activities, ensure your policy covers those activities. Finally, remember that travel insurance is there to protect you in case something goes wrong on your trip, so don’t hesitate to use it if you need to.

If you decide that you need travel insurance, here are a few things to keep in mind when shopping for a policy:

• Read the fine print of any policy you are considering to understand what is and is not covered. This is especially important for those who want to add special coverage options. 
• Compare policies from different providers to find the best coverage at the best price.
• Purchase your policy well in advance of your trip so that you are covered in case of any unforeseen circumstances.
• Ensure you’re covered for pre-existing conditions because a number of policies will exclude pre-existing conditions if you don’t pay extra for a waiver or additional coverage. 

Buying travel insurance can be a pretty quick and painless process, thanks to insurance aggregator sites like SquareMouth.

Using SquareMouth is one of the easiest ways to see multiple coverage options simultaneously. Once you’ve entered some personal details and information regarding your trip, you’ll see a variety of insurance providers and plans from which to choose.

Assessing personal and trip risks

The first consideration you should factor into travel insurance is how much of your trip is already paid for. If you’ve prepaid for most or all of your travel expenses, you may want to purchase travel insurance if you have to cancel.

Another thing to consider is where you will be traveling. If you are visiting multiple countries, getting insurance that covers you in all of them might be a good idea.

Your age and overall health can also determine whether you need travel insurance. Suppose you are older or have pre-existing medical conditions, for example. In that case, it might be a good idea to purchase travel insurance if you need to cancel your trip or incur unexpected medical expenses.

Lastly, the value of your luggage can also be a factor to consider. If you plan to bring expensive items with you on your trip, it might be worth purchasing travel insurance to cover lost or stolen luggage.

Reviewing policy options and exclusions

When it comes to travel insurance, the ease of use will depend on the provider you choose. If you’re working with a reputable insurer, then the process should be relatively straightforward. However, it’s still important to understand what is and isn’t included in your policy before you purchase it. This way, you can be sure that you’re getting the coverage you need and that you won’t be caught off guard by any fine print.

Travel insurance isn’t necessary for everyone or every trip. But it can bring a lot of peace of mind during your travels and can certainly translate into significant savings if you’re faced with a medical emergency while on your trip. It’s best to do your research, compare plans, and understand your own level of risk when it comes to deciding whether or not to purchase coverage.

Travel insurance frequently asked questions