Is Travel Insurance Worth It?

When I started working full-time, one of my first big purchases was a four-day cruise to the Western Caribbean out of Miami.

My girlfriend, now my lovely wife, urged me to get travel insurance and I obliged.

It was cheap, we never needed it, but it gave her peace of mind. I felt like it was a waste but that’s only with the benefit of hindsight. If we needed it, this story would begin much differently.

As I’ve gotten older, I’ve come to recognize that predictability is better than efficiency or optimality. With travel insurance, you know you’re protected.

If there were an emergency, I don’t have to compare prices, options, and make sure I pick the best, most financially optimal, option while under duress. If I’m incapacitated, I don’t have to worry my family has to make those decisions in a panicked situation.

If there is no emergency, I’ve just spent a little bit of money as I often do for insurance we haven’t used. We have umbrella insurance we’ve never used. We have auto insurance that we’ve never used. And we happily pay for those and are thrilled we never need it.

But we recognize we’re in a good financial situation where we can take vacations and budget for travel insurance. We won’t be buying a timeshare anytime soon but we do have disposable income. Many people aren’t and if that’s you, here’s a primer on travel insurance and how to decide if it’s worth it for you.

Update for 2022: Travel for the last few years has been very unpredictable with Covid-19, closures, quarantines, etc. We’ve only been on a few significant vacations (fewer than five trips) and purchased insurance for all of them. In two instances, we’ve had to use the insurance and it’s been delightfully easy to claim. I was shocked how easy it’s been, probably because of the pandemic. We had Cancel for Any Reason (CFAR) insurance, which is more expensive, and so that also played role.

In the first instance, we canceled a week long New Year’s Eve trip to the Dominican Republic. We were able to get the documentation relatively easily and were paid back the entirety of what was due. In the second, my lovely wife had to cancel on a girl’s trip and that too was covered (again, it’s CFAR so it should be).

As long as you don’t go on the trip, they cover you.

Table of Contents
  1. What is Travel Insurance?
  2. Do I Need Travel Insurance?
  3. How Much is Travel Insurance?
  4. Credit Cards Offer Some Travel Coverage
  5. Where Should I Get It?
  6. Final Word

What is Travel Insurance?

In a nutshell, travel insurance covers all the “bad things” that can happen on a trip. This runs the gamut of reimbursing you if the trip is canceled to medical expenses, such as if you get stabbed for your phone in another country (Matt, who I’ve met in passing once at a conference, is alright and took the experience far better than I would).

You can buy it when you book the trip to cover one trip, you can buy it from third parties, you can buy it for multiple trips – it’s an insurance policy and it’s sold just like other insurance policies.

This means that what a particular policy covers can vary from company to company. You need to read the policy carefully to fully understand it. It’s not like auto insurance where the coverage is similar. With auto, you know that you have six core pieces that mean the same thing for each policy – liability, comprehensive, collision, medical payments, personal injury, and uninsured/underinsured motorist coverage.

With travel, the pieces are slightly broader:

  • Trip Cancellation or Interruption: If your trip is canceled or ends early for a reason covered by the policy, they will pay you of your trip expenses (for interruptions, it covers the remaining expenses plus any that arise if you need to leave due to emergency). Common reasons include illness, injury, and death of you or someone on the trip. Severe weather or another event that occurs at the destination are often also included.
  • Cancel For Any Reason (CFAR): This is often an add-on for a policy which adds to the cost significantly but then makes it possible for you to be reimbursed for any reason and not just the ones listed.
  • Emergency Medical/Medical Evacuation: Your medical insurance may not cover you internationally, so this piece covers your medical expenses should you have any. It may also include being evacuated from where you are staying to the nearest medical facility.
  • Travel Delays: If there is a delay in your travel, insurance can cover any accommodations or food you need as you make your way to your destination.
  • Lost/Delayed Luggage: If your luggage is lost or delayed, this coverage will reimburse you for clothes and essentials after a certain period (often 12-24 hours). It doesn’t pay you for the items lost, just reasonable replacements.

There are additional coverages not listed above (rental car coverage, specific event coverage, etc.) but the above list is the core of what you’d see most often.

As with any insurance policy, always read the fine print. Not everything is covered 100%!

Do I Need Travel Insurance?

It’s insurance so you don’t need it but if you like the peace of mind, it can be worth it.

Think back to the last few trips you’ve taken and whether you would’ve needed travel insurance. Most likely, the answer is no. (here’s how I think about travel insurance)

But what if you did? My wife loves to tell the story about when she went on a class trip to Paris and sprained her ankle quite badly while at the Louvre. Hunky firemen carried her down the stairs (sometimes I feel like that’s a bit of embellishment!). And she never forgets the firemen part of her story.

What if she needed medical treatment? What if she had broken it and needed to visit the hospital? That’s when travel insurance, specifically the emergency medical part, would step in and cover any costs.

(years later, on a trip to Germany, she would break her big toe after slipping on a mat in the bathroom and kicking the ceramic bathtub!)

How Much is Travel Insurance?

According to an article on Consumer Reports, you should expect the most popular comprehensive coverage to cost around 5-7% of your trip’s cost.

Like anything else, there are a lot of providers and you can shop around for the best prices for the best coverage for you.

When you get a quote, you’ll be asked a series of questions about your party, your trip, and what type of coverage you’ll need. More people means more risk. The age of the different individuals in your group is important because older travelers are riskier than younger travelers. A longer trip is more expensive than a shorter trip.

As for coverage, you may not want the most comprehensive plans. Let’s say you’re visiting friends in Europe and the only cost to you is a flight. You may not be worried if your trip is canceled because your airfare is refundable. In that case, you might only want medical insurance coverage because your friends are familiar with the area and can help with anything else.

Also, as we’ll learn, some credit cards offer various pieces of travel insurance as a free benefit.

Credit Cards Offer Some Travel Coverage

In the ever-competitive world of credit cards, some cards offer similar protections as a travel insurance policy without the added cost.

Chase Sapphire ReserveFor example, the Chase Sapphire Reserve offers a lot of similar travel coverages (at no additional cost):

  • Auto Rental Collision Damage Waiver: Reimbursement for damage due to collision or theft of most rental vehicles up to $75,000 and is primary coverage (so they pay before your auto insurance). It covers most foreign countries but you’ll want to call the Benefit Administrator to confirm coverage in whatever country you’re visiting.
  • Trip Cancellation: Covers you and immediate family members up to $10,000 for each covered trip if a covered loss prevents you from making the trip. The covered losses include injury, sickness, death, severe weather, jury duty, quarantine, financial insolvency of the operator or supplier, and others.
  • Trip Interruption Insurance: Covers you and immediate family members up to $10,000 for each covered trip if a covered loss causes an interruption of your trip. The covered losses are similar to the ones for cancellation.
  • Travel and Emergency Assistance Services: 24/365 coverage when you call and they will help you find anything – medical referral assistance, legal referral assistance, emergency transportation assistance, etc – it’s like a concierge service that will help you figure things out. The cost of what you use is your responsibility. For example, they’ll help you find lost luggage but there is no lost luggage reimbursement.

The only rules are that you need to pay for your trip with the credit card. You can use travel rewards, like frequent flyer miles and hotel points, but any payments must be made with the card. In the case of cancellation and interruption, the maximum limit per occurrence is $20,000 and there is a $40,000 limit per 12 month period.

And you don’t even have to be traveling with them! As long as you pay with your card and they are immediate family, they’re covered.

The card also has a $550 annual fee but $300 in annual travel credit that offsets that big annual fee number.

Chase Sapphire PreferredAlternatively, the Chase Sapphire Preferred Card (with only a $95 annual fee) has even better benefits (in green) when it comes to coverage:

  • Auto Rental Collision Damage Waiver: Reimbursement for damage due to collision or theft of most rental vehicles and is primary coverage (so they pay before your auto insurance). It covers most foreign countries but call the Benefit Administrator to confirm coverage in whatever country you’re visiting.
  • Baggage Delay: If your bags (or immediate family members) are delayed more than 6 hours on a Common Carrier, you are reimbursed up to $100 per day for five days for essential items (clothing, toiletries, charging cables, etc.).
  • Lost Luggage: If your luggage is lost, you get reimbursement up to $3,000 per person for each trip for essentials and $500 for jewelry, watches, cameras, video recorders and electronics.
  • Travel Accident Insurance: This coverage gets a little too complicated to explain in a single bullet but if there is an accident, in which you lose something (your life, hearing, limbs, etc), the insurance will reimburse you. In the case of a loss of life, that’s $500,000.
  • Trip Delay: If your trip on a Common Carrier is delayed more than 12 hours by a covered hazard, you can be reimbursed up to $500 for each ticket for reasonable expenses such as meals, lodging, medication, etc.
  • Trip Cancellation: Covers you and immediate family members up to $10,000 for each covered trip if a covered loss prevents you from making the trip. The covered losses include injury, sickness, death, severe weather, jury duty, quarantine, financial insolvency of the operator or supplier, and others.
  • Trip Interruption Insurance: Covers you and immediate family members up to $10,000 for each covered trip if a covered loss causes an interruption of your trip. The covered losses are similar to the ones for cancellation.
  • Travel and Emergency Assistance Services: 24/365 coverage when you call and they will help you find anything – medical referral assistance, legal referral assistance, emergency transportation assistance, etc – it’s like a concierge service that will help you figure things out. The cost of what you use is your responsibility. For example, they’ll help you find lost luggage but there is no lost luggage reimbursement.

As you can see, the Chase Sapphire Preferred Card has all of the travel benefits as the Reserve plus Baggage Delay, Lost Luggage, Travel Accident and Trip Delay. So a higher annual fee isn’t necessarily a “better” card on all fronts.

Where Should I Get It?

This I don’t know but a lot of travel bloggers recommend World Nomads:

 

I’d start there and then compare prices with other companies.

Final Word

It seems to me that you could get a lot of the travel insurance benefits by booking your travel with the right credit card.

The biggest piece that isn’t available with a credit card is medical insurance coverage. For that, you could go through a travel insurance broker to find the best price or search for international health insurance on your own. The list of companies offering those is similar to the one you’d see offering domestic medical insurance – Cigna, Aetna, etc. Many are, however, designed for ex-pats or long term international travelers so what you’ll want is short term medical coverage or trip medical insurance.

That’s often only available through travel insurance since they serve different markets.

I hope this guide helped you understand travel insurance a little bit better, if you have any questions or comments please leave them in the comments section below!

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About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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  1. Steveark says

    I dropped my wife off at the airport earlier today for a twelve day European river cruise with one of her friends. She chose trip insurance because it gives her peace of mind even though the cost of a cancelled trip would not be material to us. But the whole point of a fun trip is to have fun and if the insurance takes away a small amount of stress, well that’s a good dollar to spend. I wish I had read this earlier because it is full of very useful information!

  2. Socrates A. says

    Hey Jim,
    It’s been a while:)
    I never considered travel insurance until recently!

    After my spouse retired last September & we ramped up our travels considerably, I purchased a policy through a consolidator SquareMouth that gave me several options & settled on a IMG Patriot Multi Trip International policy.

    It covers up to 30 days per trip & it has a $1M emergency medical/ evacuation coverage. I got interested in that as we visited Sri Lanka, China & Java/ Bali so far this year & the idea of getting injured while being in any of these countries was of concern. Since we only spend very little time at home I’m actually looking into actual medical insurance coverage from ones you mentioned Cigna & Aetna International. Another company is Bupa Global that a wealthy Brazilian friend recommended, but it’s pricey:)
    As you say regarding other insurance coverages you haven’t used them but available. Same here!
    That’s what insurance is about! The ‘what if scenario’:)

    A perfect example on our Indonesia trip a fellow traveler had problems with his leg. It got all red & purple couldn’t walk well & ended up visiting a hospital at the insistence of his wife who was afraid of a clot. The doctor kept him in the hospital for days & even with antibiotics the discoloration didn’t improve & as we left the country the doctor still hadn’t released him for travel in a plane. He was an ornery NYorker in his seventies. We see many Americans at that age who are totally out of shape but willing to travel long distances (20+hrs) in today’s cramped planes.
    We’re trying to accomplish that now as spouse just turned 60 & I’m a few years more but consider ourselves currently healthy & in good shape!

    • Jim Wang says

      Socrates! Great to hear from you and your experiences with SquareMouth – insurance is something people hate to pay for but love it when it helps them. That story about the leg is scary… and that’s not even considering the financial ramifications.

  3. Alien on F.I.R.E. says

    Great post!

    I particularly agree with this line: “It’s insurance so you don’t need it but if you like the peace of mind, it can be worth it.”

    In fact, I do NOT purchase travel insurance; however, my travel buddy insisted we switch to a budget airline during our transatlantic trip last Autumn and I purchased travel insurance via InsureMyTrip.com for less than $15, which turned our to be well-worth it as the budget airline filed for bankruptcy three days before our trip. The insurance representative were very professional and went above and beyond what we expected!

    • Jim Wang says

      What prompted you to get the insurance? Was it the budget airline? Airline bankruptcies seem relatively rare but $15 is a small price to pay for peace of mind!

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