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Is Travel Insurance Worth It?

  • The bottom line is travel insurance is worth the cost. In fact, the cheapest travel insurance plans can cost as little as $1 per day.
  • In rare cases, travel insurance may not be worth it – if your traditional healthcare plan covers you abroad or if you have travel coverage through a credit card or travel company like AAA.
  • The best way to evaluate if travel insurance is worth it for you is to weigh your total potential losses vs. the total cost of travel insurance to see which costs more.
  • Typically, after doing this exercise, your potential losses without insurance are far higher than the cost of travel coverage. Therefore, it’s usually worth it to buy travel insurance.
  • Keep in mind travel insurance offers more than just medical coverage, which usually sweetens the deal. Extra benefits such as rental car coverage, baggage coverage, trip interruption or cancelation coverage, or stipends for trip delays are common benefits to consider.
  • We recommend using an online comparison tool to see quotes from multiple providers and easily compare travel insurance plans all at once.

As a ballpark figure of reference, the average cost of travel insurance typically works out to be 5% to 6% of the total cost of most trips. For inexpensive trips, this means travel insurance can cost as little as $1 per day.

Alternatively, for more expensive trips that cost several thousands of dollars, paying 5% down to get travel insurance can be well worth the cost as it often allows you to be reimbursed for the entire cost of your trip.

This guide will explain when travel insurance is worth it, the different types of travel coverage you can buy, and how much you could save by purchasing a travel insurance plan.

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Does everyone need travel insurance?

While travel insurance is a great option for everyone, it may not be necessary for all trips or people. For example, if your traditional health insurance covers medical emergencies while traveling within the U.S., you may not need emergency travel medical coverage for a domestic trip.

However, at a minimum, you should ensure you can weather the losses and extra expenses that you could potentially incur on any trip you take. For example, most people probably could not afford to pay out of pocket for a medical airlift evacuation from a foreign country, even as close as Canada. Therefore, it’s important to weigh the odds of these types of scenarios occurring. Additionally, some countries will legally require you to have travel insurance before you are allowed to enter.

Consider the following instances where travel insurance is definitely worth it, and when you may be able to go without.

When buying travel insurance is worth it

Your flight has multiple connections

If you’re traveling on an international flight with multiple connections, such as the US to Italy, and then traveling to India, there are so many more opportunities for something to go wrong. Your bags could get lost or delayed during any leg of your journey, and more flights provide more opportunities for trip delays or missed connections.

In these instances, having trip delay coverage could pay for costs like unexpected hotel stays or meals you have while you wait. Meanwhile, baggage delay coverage can pay for clothing and toiletries you have to buy while you wait for your luggage to arrive. If you plan trips to multiple destinations over a year, you’ll typically pay higher premiums for multi-trip or annual travel insurance plans versus one-off plans.

  • Total value of travel insurance: $200 to $1,000 or more

You’re traveling to a destination where your medical coverage will not apply

If you’re traveling outside your home country, it’s very unlikely your health insurance plan will apply. This means failing to purchase travel insurance with medical coverage will leave you entirely on the hook for charges you rack up.

As an example, let’s say you travel to Mexico for Christmas and wind up in the emergency room with a heart attack. Your hospital stay and emergency surgery result in a $20,000 medical bill, which is entirely your responsibility.

With travel insurance that covers medical expenses, however, you could rest assured that your insurance company would foot the bill. Also keep in mind that it’s possible to rack up even higher amounts in medical bills overseas, which could be impossible to pay back on your own.

  • Total value of travel insurance: Hundreds of thousands of dollars or more

Flare-ups are common with a pre-existing medical condition you have

Imagine you have a chronic medical condition that frequently flares up, but you’re ready to embark on a dream trip to Italy. Now picture yourself in an Italian hospital dealing with your medical condition and wondering how much the bill will set you back.

In this scenario, you would be considerably better off if you had a travel insurance policy with medical coverage for pre-existing conditions already in force. Keep in mind, that pre-existing conditions could also be something as common as traveling while pregnant. Like with any other type of medical care, the value of travel health insurance can easily be in the hundreds of thousands of dollars depending on the care you receive. Especially for older travelers, senior travel medical insurance is the most important coverage to look for.

  • Total value of travel insurance: Hundreds of thousands of dollars or more

You’re taking a cruise

If you’re taking a cruise, there are plenty of things that can go wrong before your trip and after you arrive. Your flights could be canceled or delayed, resulting in you missing your cruise altogether. Plus, you could become sick or injured during your cruise, resulting in onboard medical expenses and even emergency evacuation home.

As one example, let’s say you have a heart attack during your cruise and require $5,000 in medical care from the ship physician and another $15,000 in medical care from a hospital at your cruise stop in Mexico. From there, you require medical evacuation back home for $20,000, which is the average cost of medical evacuation from Mexico according to Allianz.

In this scenario, having cruise travel coverage could mean all your costs are paid, including your medical expenses and transportation costs to get home.

  • Total value of travel insurance: $40,000 up to $1 million

You have an upcoming life situation that could cause you to cancel

Buying cancel for any reason insurance (CFAR) can also make sense in situations where you’re not entirely sure you’ll be ready to go. Maybe you have a grandchild on the way and you want the chance to cancel if the baby comes earlier than planned, or perhaps you have a sick family member and you’re worried they’ll pass away days before you’re supposed to leave for as far as the UK.

It’s also common for people to buy CFAR coverage when they’re worried about the pandemic and want the chance to cancel for COVID-related reasons that aren’t necessarily covered any other way. In any of these instances, paying for add-on CFAR coverage can be well worth it.

  • Total value of travel insurance: Up to 80% of the prepaid travel expense for hotels, flights, and more

You need peace of mind while traveling

Finally, it’s important to remember that travel insurance provides something you can’t put a price tag on — peace of mind.

This coverage can help you enjoy your trip without worrying about emergencies or other mishaps costing you thousands of dollars. Plus, you’ll sleep better at night knowing you have a third-party company ready to assist when you need it the most.

  • Total value of travel insurance: Priceless
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When travel insurance may not be worth it

Your credit card offers basic travel insurance

Some travel credit cards offer basic coverage for free if you’re a cardholder, and free credit card coverage can be enough for certain types of trips. If you’re young and healthy and not necessarily worried about travel health insurance, for example, you may be willing to rely on card coverage instead of buying a travel insurance plan.

Travel card coverage is often quite generous, although your specific benefits will depend on the travel credit card you sign up for. As one example, Chase Sapphire travel insurance offers trip cancellation and interruption coverage worth up to several thousand dollars per person, primary auto rental coverage, lost luggage reimbursement, trip delay coverage, emergency medical evacuation coverage, and more. That said, the fine print says you have to pay for the full expense of your trip with this card for coverage to apply.

Also, keep in mind that many travel credit cards with the best travel insurance benefits charge a high annual fee. For example, the Chase Sapphire Reserve® Credit Card will set you back several hundred dollars per year. Therefore, it may be better to opt for travel credit cards with no annual fee, such as some cards from American Express, many of which also have American Express travel insurance benefits.

You’re planning a domestic trip close to home

If you’re planning a domestic trip close to home, there are fewer scenarios where travel insurance would pay off. This is especially true if you’re driving to your destination and your luggage and belongings will be in your possession the entire time.

Your travel plans only include flights

If you are flying within the U.S. to see family and friends but that’s most of what you are paying for this time around, you may not need to purchase flight insurance. After all, airlines are required to get you on another flight if your trip is canceled or delayed, and having travel insurance won’t make the process any faster.

You can also opt to buy flight insurance directly from your airline in this scenario. While this type of coverage can be inexpensive, it may only cover your flights. However, a cheap travel insurance plan can include added protections for lost or stolen luggage, medical expenses, and more.

infographic flow chart with questions to help you determine if travel insurance is needed

Understanding what travel insurance covers

Before you can decide whether travel insurance is worth it or not, it helps to have a full understanding of the types of coverage you can buy.

This step is crucial since some types of travel protection can only save you around $100 to $200 per day, whereas others can prevent you from racking up tens of thousands in expenses (or more) during trips overseas.

Types of travel insurance

The following types of travel coverage are typically included in the most comprehensive travel insurance plans, although policy details and coverage limits vary by provider.

As you can see, some types of coverage offer a nominal amount in benefits while others can be worth up to 1 million dollars.

For example, missing out on trip delay coverage may cost you a few hundred dollars in hotel stays and meals if your flight is delayed overnight. Likewise, you may be out a few thousand dollars if you don’t have travel insurance and your luggage and belongings are stolen while you’re on vacation in Canada, for example.

If you wind up sick or injured overseas, however, not having travel insurance for medical expenses or evacuation could easily leave you on the hook for tens of thousands of dollars in bills and potentially more. Ultimately, this is why most travelers purchase a travel insurance policy that includes medical insurance and evacuation coverage first and foremost.

What is not covered by travel insurance?

Buying a travel insurance policy can provide considerable peace of mind, but you should know that some situations typically are not covered by most travel plans.

As an example, “disinclination to travel” due to COVID-19-related reasons or other pandemic fears is typically not covered by travel insurance unless you have optional CFAR coverage in place. For full COVID-19-related, coverage you should consider looking into COVID-19 travel insurance.

Another scenario not covered by travel insurance is when a natural disaster has already begun. If you are planning a trip to the Caribbean during hurricane season and a major storm system has already been named, you can no longer purchase most types of travel insurance such as hurricane travel insurance, for that specific trip.

Most travel insurance plans also exclude pre-existing conditions, but exceptions can be made when you pay for additional coverage for pre-existing medical conditions and purchase your travel insurance plan within a few weeks (usually within 15 days) of making your initial trip deposit.

Other situations not typically covered by travel insurance include:

Should I use my credit card travel protection instead of buying travel insurance?

If you’re tempted to use credit card travel insurance instead of buying a policy, you’ll want to read over the fine print from your card issuer so you know what is and isn’t covered. Also check to make sure coverage limits are sufficient for your needs based on the trip you are planning to take, and make sure you understand any exclusions that apply.

Finally, keep in mind that credit card travel insurance rarely provides any coverage for medical emergencies. Even the Chase Sapphire Reserve® Credit Card, which is one of the few travel credit cards that does provide medical coverage, only includes up to $2,500 in coverage for emergency medical expenses (including dental), and only after you pay a $50 deductible.

If you decide to travel with credit card coverage only, you’re leaving yourself vulnerable to expenses that can arise if you need emergency medical care. With that in mind, you should only rely on credit card coverage if you’re willing to take that risk.

Bottom Line: Is trip insurance worth it?

The benefits of travel insurance include financial protection from life’s many “what ifs” and the peace of mind you get knowing you’re covered.

Meanwhile, the disadvantages of travel insurance include the additional cost required and the fact you have to spend time and energy researching and comparing policies before you buy.

Either way, travel insurance is well worth it if you wind up needing coverage, and you won’t know that part until it’s far too late. With most travel insurance plans adding just 5% to 6% of your total trip cost, you’re better off factoring this coverage into your travel budget from the start.

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FAQ: is travel insurance worth it?

Does travel insurance cover COVID claims?

Many travel insurance companies include coverage for coronavirus and many of the high-risk complications it causes. However, you’ll want to read over the fine print of travel insurance policies you’re considering so you know for sure.

Is it important to get trip insurance?

Travel insurance typically costs a few hundred dollars for a standard trip, yet the costs of not having coverage can easily run into the tens of thousands of dollars or more. With that in mind, travel insurance is typically considered a good investment.

Is it a good idea to buy trip insurance just to be safe?

Buying travel insurance can provide considerable peace of mind, particularly if you’re spending a lot of money on a trip you’ve been planning for a long time. For the most comprehensive coverage, you can even add on CFAR protection that lets you cancel for any reason. This coverage gives you the option to stay home and get up to 80% of your pre-paid, non-refundable travel expenses back.

Is it bad to not have travel insurance?

Not having travel insurance leaves you vulnerable to exorbitant costs caused by overseas emergencies and related expenses caused by a third-party. Meanwhile, having coverage can protect you from these costs and the stress they cause.

Do you need insurance when traveling abroad?

Being insured for overseas trips is especially important since your own health insurance plan will not apply. Also note that overseas trips typically require more connections and more opportunities for some aspect of your trip to go awry.

Ultimately, these are the main reasons you should always buy travel insurance for overseas trips. Having travel insurance can help protect against emergency medical expenses, the exorbitant costs of medical evacuation, costs associated with repatriation of remains, and more.

What is not covered by travel insurance?

While you’ll want to read over the fine print of your travel insurance policy to learn about exclusions, typical items not eligible for a refund include disinclination to travel due to the pandemic or other reasons, cancellation caused by inclement weather that exists before purchasing a plan, cancellation due to pre-existing conditions not specifically covered, acts of war, claims resulting from alcohol or drug use, claims that result from medical tourism, illegal activities that result in injury or other losses, and certain adventure activities and sports.

What are the disadvantages of travel insurance?

The main downside of purchasing travel insurance is the added cost, which typically amounts to around 5% to 6% of the total cost of a trip. Another downside is the fact that you have to research and compare plans before you buy, and that not all plans provide sufficient coverage for all trips you want to take.

To make the research part easier, and to ensure you’re not overpaying for travel coverage, we suggest shopping around to compare plans and costs from each insurer through an insurance portal like Squaremouth.

About the Author

Holly D. Johnson
Holly D. Johnson Finance Expert

Holly D. Johnson is an award-winning personal finance writer who covers topics like insurance, investing, credit and family finance. As a leading voice in the travel and loyalty space, Johnson has traveled with her family to more than 50 countries over the last decade.

The author has also written extensively on the power of household budgeting, and she even co-authored a book on the topic. Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love was originally published in 2017, and it teaches families how to use zero-sum budgeting to reach their financial goals. She is also the co-owner and founder of the family finance and travel website, ClubThrifty.com.

Johnson’s 10+ years of writing have focused on helping families make important financial decisions at each stage of their lives. The author also applies the financial principles she teaches to her own life, and she is currently on track to retire in her late 40’s with her partner. She currently lives in Central Indiana with her husband and children, and she is a regular contributor for Bankrate, CNN, Forbes, U.S. News and World Report Travel and many other notable publications.