Is it worth buying travel insurance?

You’ve done it. You’ve booked the flights, reserved the hotel for that two-week European dream vacation, and even pre-paid for the guided tours. The total on your credit card statement is a little breathtaking, but this trip is a major investment in your well-being.

Then, as you’re about to close the browser, a pop-up appears: “Don’t forget to add travel insurance!”

It’s an extra expense on an already expensive trip. You pause and wonder, “Is this just an upsell? I’m healthy. What could go wrong? Is travel insurance really worth the money?”

As a resource focused on smart financial decisions, we’re here to tell you that this isn’t just another small add-on. It’s a critical financial safeguard. Skipping it can be one of the most expensive mistakes a traveler can make.

Let’s break down exactly what you’re paying for, what you’re protected against, and why this small premium can prevent a six-figure financial catastrophe.

What Does Travel Insurance Actually Cover?

The first point of confusion for most people is what “travel insurance” even means. It’s not a single product. A comprehensive policy is actually a bundle of different coverages, each designed to protect you from a specific, and potentially very expensive, problem.

Here are the main pillars of a good policy.

1. Emergency Medical and Dental Coverage

This is, without question, the most important reason to buy travel insurance, especially when leaving the United States. A common (and dangerous) assumption is that your domestic health insurance will cover you abroad.

Spoiler: It almost certainly won’t.

• Medicare: If you’re on Medicare, you have zero coverage outside the U.S., except in a few extremely rare circumstances.
• Private PPO/HMO Plans: Most domestic plans have massive coverage gaps overseas. They may only cover “life-threatening” emergencies, forcing you to pay 100% of the bill upfront and then fight for reimbursement (which is often denied) when you get home.

A travel medical policy covers costs for doctor visits, hospital stays, prescription medications, and emergency dental procedures if you get sick or injured on your trip.

2. Emergency Medical Evacuation

This is separate from medical coverage and, in many ways, even more critical. If you break your leg hiking in a remote part of the Alps, your policy’s medical coverage pays for the doctor in the local village. But how do you get to that doctor?

Medical evacuation covers the cost of transporting you to the nearest adequate medical facility. If your condition is severe, it can even cover the cost of flying you back home to the U.S. with a medical escort.

How much does this cost? A medical evacuation flight from Europe or Asia back to the U.S. can easily exceed $100,000 to $250,000. This one benefit alone makes insurance “worth it.”

3. Trip Cancellation

This is the benefit most people think of first. You’ve paid $8,000 in non-refundable deposits for a cruise. Two days before you leave, you come down with a severe case of pneumonia, or a parent is suddenly hospitalized.

Trip cancellation reimburses you for those non-refundable, pre-paid costs if you have to cancel your trip before you depart for a “covered reason.”

4. Trip Interruption

This is the sibling to Trip Cancellation. You are four days into your 10-day trip when you get a call that a family member has passed away back home. You need to cut the trip short and fly back immediately.

Trip Interruption coverage reimburses you for the unused portion of your trip and, crucially, covers the often-exorbitant cost of that last-minute, one-way flight home.

5. Baggage Loss, Delay, or Damage

This is the most common hassle of travel. Your airline sends your bag to Tokyo while you’re in Paris. A baggage delay benefit provides a daily stipend (e.g., $150/day) to buy essential items like clothes and toiletries until your bag arrives. If the airline loses your bag for good, the baggage loss benefit reimburses you for the contents up to a specified limit.

6. Travel Delays

Your flight is canceled due to a blizzard, and you’re stranded at the airport hotel for two days. This benefit reimburses you for “reasonable” expenses like a hotel room, meals, and transportation until you can get on the next available flight.

The High Cost of an Overseas Medical Emergency: Are You Covered?

Let’s dedicate a full section to this, as it’s the financial risk that truly matters. We are spoiled in the U.S. by the (admittedly complex) idea that our insurance will eventually cover a hospital visit. This is not true in the rest of the world.

Many foreign hospitals, even in first-world countries, will demand payment in full before they even treat you, or at the very least, before they discharge you. They do not “bill” your Blue Cross Blue Shield plan back in Ohio.

Consider these real-world, average costs for common incidents:

• Broken Leg (requiring surgery) in Japan: $20,000 – $35,000
• Appendicitis in Mexico: $15,000 – $25,000
• Heart Attack (with hospital stay) in Europe: $75,000 – $150,000
• Medical Evacuation from a Cruise Ship (Caribbean): $30,000 – $60,000

A comprehensive travel insurance policy with $100,000 in medical coverage and $500,000 in evacuation coverage might cost you $150. When you compare the premium to the potential risk, the math becomes incredibly clear. You are insuring against a

financial event that could wipe out your savings or lead to massive debt.

Protecting Your Investment: How Trip Cancellation and Interruption Works

For most comprehensive policies, Trip Cancellation/Interruption isn’t a “get out of jail free” card. You can’t just change your mind. You must cancel or interrupt your trip for a covered reason.

These reasons are explicitly listed in the policy document, but they almost always include:

• Sudden illness, injury, or death of the traveler, a traveling companion, or a close family member (even one not traveling with you).
• Your primary residence being made uninhabitable (e.g., house fire, hurricane).
• Being laid off from your job (after a certain period of employment).
• Airlines, cruise lines, or tour operators ceasing operations due to bankruptcy.
• Being called for jury duty or subpoenaed as a witness.
• A documented terrorist incident at your destination within 30 days of your arrival.

If your reason isn’t on this list, your claim will be denied. This is a critical piece of fine print to understand.

Understanding the Fine Print: What Travel Insurance Typically Excludes

This is where many travelers get frustrated. An insurance policy is a legal contract, and its exclusions are just as important as its coverages. Being aware of them upfront is key to having a good experience.

Common exclusions include:

• Pre-existing Medical Conditions: This is the most important exclusion to understand. Most policies have a “look-back” period (e.g., 60-180 days). They will “look back” from the date you bought the policy. If you had any change in a medical condition in that period (new diagnosis, new medication, a visit to a specialist), any claim related to that condition will be denied.
  • The Solution: Look for a policy with a “Pre-existing Condition Waiver.” You can typically get this waiver (making your conditions coverable) if you buy your policy within a short window (usually 14-21 days) of making your very first trip payment (e.g., your flight or tour deposit).
• Foreseeable Events: You can’t buy insurance for a hurricane after it’s been named. You can’t buy a policy to cover a travel ban that’s already been announced. Insurance is for the unknown, not the inevitable.
• High-Risk Activities: Standard policies often exclude “adventure” sports. This can include anything from bungee jumping and scuba diving to sometimes even skiing or hiking at high altitudes.
  • The Solution: If you plan on doing these activities, you must purchase a “Sports Rider” or an “Adventure Travel” plan that specifically lists your activity as covered.
• Mental Health Disorders: Many basic plans exclude claims arising from mental or emotional disorders (like anxiety or depression) unless you are hospitalized.
• Reckless Behavior: If you get injured while intoxicated, committing an illegal act, or riding a motorcycle without a helmet, your claim will be denied.

“But My Credit Card Has Travel Insurance, Right?” – A Common (and Costly) Misconception

This is a key question for anyone in the finance and credit card space. The answer is “Yes, but…”

Premium travel rewards cards (like the Chase Sapphire Reserve or The Platinum Card® from American Express) offer some excellent travel protections. However, they are not a full replacement for a comprehensive policy.

Here’s the difference:

1. Medical Coverage is Low (or Non-Existent): This is the biggest gap. Many cards offer zero medical coverage. Those that do (like the Sapphire Reserve) have lifetime caps that are relatively low (e.g., $100,000) and may only cover Emergency Evacuation, not actual hospital bills. A comprehensive plan is designed to be your primary medical payer.
2. Coverage is Often “Secondary”: This means the card’s insurance will only pay after every other policy you have (your personal health insurance, the airline’s policy) has paid its limit. This creates a massive claims headache. A good primary travel insurance plan handles everything from day one.
3. Cancellation is More Limited: Credit card trip cancellation often has lower per-trip limits (e.g., $10,000) and may have a more restrictive list of “covered reasons” than a dedicated insurance plan.
4. You Must Pay with That Card: You must have paid for the flight, hotel, or tour with that specific credit card to be eligible for its protections.

The Verdict: Think of your credit card’s protection as an excellent supplement. It’s great for covering baggage delays or rental car damage. But it is not a substitute for a comprehensive policy with high-limit medical and evacuation coverage.

Domestic vs. International Travel: When Is Insurance a ‘Must-Have’?

The calculation for “is it worth it” changes depending on where you’re going.

For International Travel: Yes, It Is Essential.

This is not negotiable. The risk of a six-figure medical bill from a simple accident is too high. Your domestic health insurance is, for all practical purposes, useless outside U.S. borders. You must have, at a minimum, a policy with high medical and medical evacuation limits.

For Domestic Travel: It’s a “Maybe.”

Here, the calculation is different.

• Medical: Your U.S. health insurance will work, so you’re covered for medical emergencies (though you still need to check for in-network vs. out-of-network costs if you’re traveling far from home).
• The Real Value: For domestic trips, you are buying insurance almost exclusively for Trip Cancellation/Interruption and Baggage issues.

Ask yourself this: “If I had to cancel this trip tomorrow, could I comfortably afford to lose 100% of the non-refundable money I’ve already paid?”

• If the trip is a $400 weekend flight to visit family, you can probably “self-insure” and just accept the risk.
• If the trip is a $10,000 non-refundable cruise in Alaska or a $7,000 week at Disney World with the whole family, you are protecting a significant financial investment. In this case, a cancellation-only policy is a very smart buy.

How to Choose the Right Policy: Single-Trip, Annual, and CFAR Explained

Not all plans are created equal. Here are the main types you’ll see.

• Single-Trip Plan: This is the most common. You enter your trip dates, your age, and your total non-refundable trip cost, and you get a policy that covers only that specific trip.
• Annual (or Multi-Trip) Plan: If you are a frequent traveler, buying a separate policy for every trip is expensive and inefficient. An annual plan covers you for an unlimited number of trips for one 365-day period.
  • The Break-Even Point: These plans typically become cheaper if you take three or more international trips per year.
• The “Cancel for Any Reason” (CFAR) Upgrade: This is the ultimate “peace of mind” add-on. As we discussed, standard cancellation only covers listed reasons. What if you just… don’t want to go? What if you have a work conflict or a fight with your travel partner?
  • A CFAR rider lets you cancel your trip for any reason at all.
  • The Catches:
    1. It’s an expensive upgrade (often adds 40-60% to the policy premium).
    2. It typically only reimburses 50% to 75% of your trip cost, not 100%.
    3. You must buy it within the 14-21 day window of your first trip deposit.
    4. You must cancel the trip at least 48 hours before departure.
  • Who is this for? The nervous traveler, or someone booking a very expensive, complex “once-in-a-lifetime” trip (like a wedding or safari) where many non-covered things could go wrong.

Smart Shopping: Where to Find the Best Travel Insurance Plans

Your first instinct might be to click the “Add Insurance” button on the airline or travel booking site (like Expedia). Resist this urge.

These one-click plans are convenient, but they are often overpriced and offer “one-size-fits-all” coverage that is usually far less comprehensive than what you can buy on your own.

Instead, use a travel insurance marketplace. These are websites (like SquareMouth, InsureMyTrip, or TravelInsurance.com) that allow you to enter your trip details once and get quotes from a dozen different reputable providers (like Allianz, Travel Guard, Seven Corners, and World Nomads).

This allows you to compare policies side-by-side, read customer reviews, and—most importantly—filter for the exact coverage you need (e.g., “must have a pre-existing condition waiver” or “must cover adventure sports”).

Is Travel Insurance a Smart Financial Move?

Let’s go back to our core financial focus. We buy home insurance to protect against a fire. We buy auto insurance to protect against a major collision. We do this not because we expect these things to happen, but because we know we could not financially absorb the cost if they did.

Travel insurance is no different.

You are not “wasting money” on a $150 policy. You are leveraging that $150 to buy financial certainty and transfer the risk of a $150,000 medical evacuation bill from your savings account to an insurance company.

• For international travel, it is an essential and non-negotiable part of your budget.
• For expensive domestic travel, it is a wise financial tool to protect your non-refundable investment.

For the price of one nice dinner at your destination, you purchase complete peace of mind, knowing that if the worst-case scenario happens—from a lost bag to a life-threatening emergency—you are protected.

In our book, that’s not just “worth it.” It’s one of the smartest financial decisions a traveler can make.