Travel insurance is one of those things that is either left until the last minute or forgotten altogether because it is deemed too expensive and unnecessary.

I’m often asked about travel insurance so I thought that I’d put together this quick guide on buying and using travel insurance. I should point out that I do not work in the insurance industry so this is just my personal views from what I’ve researched and learnt along the way.

Travel insurance is more than just medical cover

While medical expenses are most likely the reason that most people take out travel insurance it normally covers much more than just this. Travel insurance should also cover such things as trip cancellations, lost luggage, airline accidents as well as other losses incurred whilst travelling. From the start of your trip up until the end. That means that it provides cover within your own country as well as internationally.

Then there’s cancellation insurance. What happens if you need to cancel your vacation early at any point, possibly even before you leave. Imagine that you’re just arrived at your hotel and you hear that a family member is sick back home and needs your help. If you have elderly parents then this is not an uncommon situation and you stand to lose a lot of money if you depart early.

When you consider all the things that can go wrong while you are on holiday then it’s actually not bad value.

Is travel insurance really necessary?

Travel is already expensive enough, isn’t it? The cost of air fare, cruises, hotels, ground transportation, food and activities and entertainment are already high enough. I don’t know about you, but I work hard for my money, and when I travel, I want to keep as much of my money in MY pocket as possible. Is travel insurance a necessity or a luxury? Why not cut a few corners here and there. Why buy something if it’s not really needed?

Personally I believe that travel insurance is necessary. I’m not a wealthy person and the thought of being stranded in a foreign country and being denied medical assistance because I couldn’t afford the bills is a scary thing. We all know how much even a simple medical procedure can cost so it’s not something I take lightly.

Imagine being far away from friends and family and not having the financial means to get the treatment that you need. Some countries may even refuse treatment if you cannot prove that you have the appropriate funds.

A sudden illness or accident can strike at any time, regardless of age or length of time abroad. Suppose you fall ill just a few hours after arriving at your destination. Or suppose you make a day-trip to another country, and you are injured in a traffic accident.

Suppose one of your children is part of a group making a class visit abroad, gets food poisoning and requires hospitalization. In all cases, without adequate travel health insurance, you will be responsible for the costs above and beyond the limitations of any existing medical plan that you may have.

You can see how important it is to have a good insurance policy that has enough coverage for any eventuality. That’s not to say that I want to pay a lot of money for my insurance, I still want to get a good deal on it, but experience has taught me that there are ways to save money when it comes to travel insurance.

I’ll discuss in depth later on ways to save money on your travel insurance but just to touch on it now I would say that you should have a look to see if you might not already have some form of insurance.

Your medical plan, employee benefits, or even through a credit card may already offer some form of coverage. If the coverage is sufficient for your needs, then you can enjoy your trip without incurring the extra expense of travel insurance. However, if you are not sure of your coverage, or if your coverage is inadequate or non-existent, then your next step should be to research and purchase the travel insurance coverage you need.

How much can you expect to pay for travel insurance?

I remember that the first time that I bought travel insurance and it cost me close to $500. I was in a hurry and probably didn’t do my homework properly. At the time it was a large portion of my travel cost but I knew that it was important to have.

I’d like to think that I’m a little more savvy and travel wise now. Over the years I’ve learnt a thing or two about buying insurance and now that it’s important to shop around for the best deal and to make sure that I have enough coverage for my needs.

Many tour agencies may provide their own, or through a third party, insurance to cover your trip. This is easy to arrange but has it’s benefits and pit falls as well. On the upside is that the insurance they provide should be matched to your tour, so for example if you have a special activity planned for your trip such as diving or rock climbing then there’s a good chance that they have done their footwork and provided a policy that will cover you. On the other hand you will likely find this type of insurance more expensive, as there is a middleman involved, and if your tour operator goes bust then your insurance is unlikely to cover you.

So how much will your travel insurance actually cost?

As a rule you can expect to pay between 4%-10% of your total trip cost.

So how much will it cost you? Not as much money as it will cost you if you get sick or injured abroad and you don’t have any travel insurance coverage! That’s the obvious answer to the question.

There are many factors that go into calculating your insurance cost. Your age, length of travel and type of coverage all play a part as does the number of travelers.

Expect the premium to increase with your age or if you have any pre-existing conditions.

The good news is that you can easily, conveniently and quickly research and locate excellent but cheap online travel insurance and reduce the costs while making an informed purchase. This is much better than taking what you are offered at the travel agency because you can choose from hundreds of travel insurance companies and polices and save yourself a lot of money in the process.

Tips to help you get the best deal when buying travel insurance

To assist you in your research, here are some suggestions to help you make an informed purchase.

1. Consider the worst-case scenario

If you can financially withstand the worst-case scenario then maybe you don’t need travel insurance or maybe you don’t need a comprehensive policy. In some countries, such as Thailand, medical costs are relatively low and hospital care is excellent in the major cities so it be within your means to cover a lot of costs yourself cheaper than most insurance coverage.

2. Consider evacuation coverage

Depending upon where you plan on visiting it may or may not be worth investing in medical evacuation coverage. If you feel that the medical treatment available in that particular country is below your standards then you may wish to be evacuated back home for treatment.

3. Check your existing insurance policies for possible coverage

There is no sense in paying more for what you already have in your homeowner or tenant policy, such as theft and loss coverage.

4. Consider annual travel insurance policies if you are a frequent traveler

Sometimes they are called multi-trip travel insurance policies. Whatever the name, these policies can be relatively cheap when compared to single-trip travel insurance policies.

5. Read the fine print thoroughly

Make sure that you understand what the company considers to be a legitimate reason for cancellation or interruption. If the list is too restrictive, maybe you should consider another policy.

6. Don’t restrict yourself to buying only from your travel agent

More often than not the agent will probably only have one company’s product available, and it’s there for your convenience, but that convenience can mean that it is also more expensive than you could acquire elsewhere.

7. Ask plenty of questions about the coverage on offer

Legal jargon is not always easy to understand and your interpretation of it may differ from that of the insurer. Ask for clear explanations of all the terminology. Make sure that you and the travel insurance company are speaking the same language.

8. Be wary of buying insurance through your travel provider

If the travel agency or airline goes bankrupt, how adequate will your insurance coverage be then.

Once you have your travel insurance policy

Remember that your travel insurance policy covers you between certain specific dates, so don’t start your trip early or extend your trip without first changing the dates of coverage on your travel insurance policy. Of course, this might cost you extra, but that’s cheaper than finding yourself without coverage when you need it the most.

Also, it almost goes without saying that you should bring your travel insurance policy with you when you go abroad. You can’t consult the policy if it’s sitting on your desk at home. You should also carry your travel insurance company’s toll-free assistance phone number and other contact information with you wherever you go. It does you no good if you get ill or hurt and the necessary policy information is sitting in your hotel room. It’s also a good idea to bring your regular medical coverage cards and info with you.

One thing that I always do nowadays is to take pictures of all my insurance policies, travel documents, passport and cards on my phone before I go. That way if I lose the paper copy I still have a backup to show as proof and all the relevant numbers on record.

A final word

Hopefully you’ll find these tips of some help the next time that you purchase travel insurance. You’ll become more confident in buying insurance the more times you do and and will likely find companies that you trust to find you the best deal.

The cost of insurance is normally outweighed by the peace of mind and comfort knowing that there is one less thing for you to worry about when you are abroad.