Nothing is more confounding to vacationers than when a travel agent poses the question, ” Would you like to purchase travel insurance for your trip?” And unfortunately, there’s no right answer to that question. There are times when it’s a waste and other times when it could save someone from disaster. Typically, frugal travelers forgo it just to save money and those that hate surprises opt to purchase it, even when they don’t need it.

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There’s much confusion regarding travel insurance, especially since many people assume it’s a scam to make extra money from travelers. What do the different insurances cover? What if it’s not needed after all? To answer these questions, we’ve compiled this guide to travel insurance so that you’re armed and ready the next time you plan a trip!

 

First, let’s discuss the different types of travel insurance.

Most insurance packages include most (or all) of these items, but they will vary. Do your due diligence and review what specifics are covered with your particular insurance package before booking to ensure that you’re fully covered in the areas that you need.

1.) Emergency Medical:  Some personal medical insurance plans (Medicare especially) will not cover international medical care, and that’s where medical travel insurance steps in. Travel medical insurance covers your medical expenses no matter where you are in the world. Some supplemental plans even cover the deductible portion of your expenses. If you’re traveling within your country and have decent medical coverage, vacation medical plans are often not needed.

2.) Evacuation:  In the event of an extreme emergency, evacuation insurance covers the cost of your transportation to an appropriate medically equipped facility. Very few insurance carriers cover this, so it’s not a bad add-on when purchased in a bundle with other travel insurance. But, keep in mind that the likelihood of this happening would be small with a healthy traveler.

3.) Cancellation:  This insurance is possibly the most useful of all. It covers you should your trip be canceled due to unforeseen circumstances such as: illness, natural disaster or company bankruptcy. If a trip is mostly prepaid like a cruise or a vacation package, this type of insurance offers great peace of mind.

4.) Baggage:  Baggage insurance is what most people worry about, because we all have heard at least one ‘lost baggage’ horror story in our lives. Don’t fret: most airlines cover lost baggage as soon as you hand over your belongings. Baggage insurance doesn’t just cover airline loss, though. If you personally lost your bag, or if a theft occurred, sometimes even just if you are delayed, you can get reimbursed up to a set amount.

5.) Accidental Death or dismemberment:  The most morbid of all of the insurances, Accidental Death or dismemberment insurance will pay vacationers up to $500,000 if you or a loved one should perish or have an irreparable accident while on your trip. If you already have a life insurance plan, this one shouldn’t be needed.

 

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Now that we’ve broken down the different insurance types, you’ll need to take a look to see if you’re already covered under any of your regular insurance policies. For example, if you already have a great life insurance plan, you won’t need accidental death coverage and if your health insurance covers emergencies abroad, it’ll be smooth sailing on that front. Certain credit cards also offer travel perks and insurance features so it’s best to see what they offer before forking over money for additional coverage. Check out this handy guide to see if your cards offer any traveling insurance benefits. 

If you find there are holes in your coverage, next you’ll need to try and figure out what your personal financial loss would be if something catastrophic were to happen. If your trip is costing an arm and a leg, please consider purchasing extra coverage. If your $300 flight didn’t put a dent in your pocket, though, politely decline.

Typically, you’ll want to seriously weigh the benefits of adding extra insurance in these instances: when traveling abroad; if you are older or in frail health; if a good chunk of your trip is non-refundable and/or if your vacation package has a lot of moving pieces (connecting flights, tour groups, excursions, etc.) In these cases, it may be worth the money for you to add the additional travel insurance, if only for some extra peace of mind so you can truly relax and enjoy your trip.

One more tip before you make your decision. Travel insurance can vary widely when it comes to cost as well as coverage. Most travel insurance policies cost between 5-12% of the total cost of your trip, (and it’s usually non-refundable whether you use it or not.) So to make sure you’re spending your money wisely, check “Insure My Trip” to compare plans and prices before making your purchase.