Travel Insurance 101: The Complete Guide to Travel Insurance

(This is one part of our Travel Insurance 101: The Complete Guide to Travel Insurance. For other parts, check the following links)

Introduction- General definitions, FAQ’s, Traveler Profiles
Trip Cancellation Coverage- What is it? Do I need it?
Travel Medical/Evacuation Coverage- What is it? Do I need it?
Additional Trip Insurance Coverages- What else does travel insurance cover?
Buying Travel Insurance- Where and how do I buy travel insurance?

What this guide will do for you…

Define travel insurance, the various coverages, and the key terminology
What to look for when buying a travel insurance policy
Provide links so you can read additional reviews and articles
Provide links to travel insurance companies including their AM Best ratings to get a quote and purchase online

1. Introduction

Buying travel insurance isn’t hard, but finding the right plan to meet your needs can be a challenge

In fact, the actual buying part is so simple you can get a quote, enroll, pay with a credit card, and get an email confirmation of coverage in less than 5 minutes. The challenge is to understand the coverage and find the right plan for your needs.

This section will cover:

General Definitions
Frequently Asked Questions
Common Traveler Profiles

What is travel insurance?

Travel insurance is purchased to cover travel-related risks.

Before your trip, these risks might include last-minute cancellations due to sickness, severe weather, or even terrorist attacks.

During your trip, it provides coverage for emergency/accident care, medical evacuations, travel delays and missed connections, lost/stolen baggage, and more.

Travel insurance can be purchased for both domestic and international trips and can cover a variety of stays from the quick two day weekend up to 12 months.

Travel insurance is available in two basic plan types

Package Plans

The Package Plan is used by most travelers because it provides a variety of coverages in one simple plan, including: trip cancellation, medical emergencies, medical evacuation, lost baggage, missed connections, and several other coverages. Package policies vary from Basic plans with less coverage and lower coverage levels, to Premium plans with top-of-the-line benefits and high limits.Package Plans, like all travel insurance plans, can be purchased through a travel insurance comparison site. Read more about Package Plans

Package plans are perfect for:

Vacation travelers (general travel)
Families
Business travelers
Cruise takers
Senior travelers

Recommended Package Plans (click link to visit site and get a quote)

Worldwide Trip Protector Gold from Travel Insured International
My Travel Guard from Travel Guard Insurance
Travel Max from Travelex Travel Insurance
Vacation Plan from TravelSafe

Travel Medical Plans

Travel Medical Insurance is purchased by travelers leaving their home country for a few days or up to a year, and provides emergency medical treatment, medical evacuation coverage, and emergency assistance. Read more about Travel Medical insurance.

Travel Medical plans are used by:

US citizen’s traveling abroad (business assignments, expatriates, etc.)
Foreign citizens visiting the US (i.e. parents from India visiting family in US)
Any traveler leaving their home country

Recommended Travel Medical Plans

Liaison from Seven Corners
Trip Protector from HTH Worldwide

In general, most travelers insurance needs falls into one of the above types of plan. A third category might include Evacuation Only Plans, Annual Plans, Flight Accident Plans, and Accidental Death Plans. These are specialty plans, and provide very specific coverage.

Why do people buy travel insurance?

The reasons for purchasing travel insurance is different for every traveler and every trip.

Some people simply want to know they have medical coverage while traveling abroad (as we’ll discuss, most home-country healthcare does not cover you abroad). Other travelers are concerned about losing their trip investment if they need to cancel. Many travelers have concerns about losing their luggage or travel documents. Some have concerns about the extreme costs of emergency medical evacuations.

Later in this section, use our Traveler Profile list to get an idea of the types of coverage you might want to consider.

Which company should I buy travel insurance from?

There are over 15 companies in the travel insurance business, and each one sells a variety of plans. Some companies specialize in simple, easy-to-use policies for the everyday traveler. Others specialize in niche travel insurance plans, designed for specific groups like golfers, students, or people taking a cruise. Some focus on travel medical plans and evacuation plans, providing insurance plans for travelers around the world.

Each company has pros and cons, but most importantly you need a reputable, experienced company with the right plan for your trip. At the end of this guide, you will also find ratings for each company and links to their websites.

How much does travel insurance cost?

This will depend on the type of plan you have, the coverage, the amount of coverage, and other factors.

In general, a Package Plan will cost between 5-7% of the total trip cost. So, if your total insured trip cost is $5,000, a package plan would be around $250-350 (5-7% of $5,000). This varies based on several factors, so keep in mind the 5-7% figure is only a ballpark estimate.

The 5-7% number also assumes you are purchasing Trip Cancellation coverage. You can purchase a Package Policy for the other coverages it provides, and omit the trip cancellation component. This will reduce the amount of premium significantly.

With Travel Medical plans there is no trip cancellation coverage, but the plan cost depends on trip length, traveler age, and several other factors. These plans can be as low as dollars per day.

What types of travelers buy travel insurance?

Travelers of all types buy insurance for their trip. Wealthy retirees taking a cruise, families going to Disneyland, couples taking a vacation, and college students backpacking around Europe all have a need for travel insurance.

To get an idea of the coverage you might need, take a look at the following Traveler Profiles and find the best match for you. Read the description to get an idea of the different types of coverage you should consider.

Common Traveler Profiles

General Traveler/Vacationer (Leisure Travel, Family Vacation, etc.)
I’m traveling with a spouse, friends, or family, and taking a “vacation” trip (abroad or domestically), and want a general travel insurance plan. I want to insure the cost of my trip, so I don’t lose money if I need to cancel. I’m also interested in coverage for medical emergencies and medical evacuations, lost baggage, and even travel delays. I would also be interested in any additional coverages, such as identity theft, or rental car damage. Recommended plan: Package Plan (Basic to Premium, depending on preference)

Cruise Traveler
I’m taking a cruise and need a travel insurance plan for several reasons. Since I’ve pre-paid for an expensive cruise package, I definitely want to insure the cost of the trip, so I don’t lose this considerable investment if I need to cancel. Since I’ll be on a cruise ship far from hospitals, it’s important I have coverage for medical emergencies, and especially emergency evacuation. I also want coverage for lost or damaged baggage, delayed trips, missed connections, and other standard coverages. Recommended plan: Package Plan (Moderate to Premium depending on needs)

Parents traveling with kids
I’m taking a trip with my children, and want a travel insurance plan that takes family needs into account. Since kids can increase the chances of last-minute illnesses, I definitely want to insure the cost of my trip against cancellation, so I don’t lose money if a family member becomes ill and cannot travel. It is also essential to protect my family against medical emergencies, lost or damaged baggage, and delayed trips. I would also be interested in “family specific” coverages, such as “free coverage for kids”, or family-concierge service. Recommended plan: Package Plan with “family specific” benefits

Budget-Minded Traveler
I’m taking a trip and want the basic travel insurance coverage, but I also want to keep my budget in mind. I might want to cover against a canceled trip, but I definitely need some medical coverage, baggage coverage, and 24/7 assistance support. I’m looking for the best value plan that provides basic coverage. Recommended plan: Basic Package Plan

Students
I’m a student traveling overseas; either on a semester abroad or an extended summer break. Since I’ll be traveling in foreign lands, I definitely need coverage for emergency medical treatment and medical evacuation. It is also important to insure my baggage and possessions, and I want to have good 24/7 assistance services as well. I might need a plan for several months of coverage. Recommended plan: Student Plan

Frequent Traveler
I travel several times throughout the year, both overseas and domestically, and want a single plan to provide coverage for medical emergencies, medical evacuations, baggage, and even trip cancellation/interruption. Some of my trips last up to a month, while others are very short, but I might take up to 10 trips a year. Recommended plan: Annual or Multi-Trip Plan

Senior Traveler
I’m a Baby Boomer enjoying my later years traveling and seeing the world. I’m fairly fit, but I have concerns about traveling abroad without medical coverage. I know that Medicare does not cover my overseas, so medical coverage and evacuation is very important to me. I would also like trip cancellation coverage and some of the other basic trip insurance coverages like lost baggage and travel delay. I need a plan that does not restrict my age group. Recommended plan: Premium Package Plan with senior-specific benefits and adequate age accommodations

Extended Trip, Expatriates, or Living Abroad
I’m planning on living abroad for an extended period of time, and I want to have US-style health insurance coverage while I’m overseas. It is important to have comprehensive medical coverage, accident and emergency coverage, and emergency medical evacuation and transportation. I do not need trip cancellation coverage, baggage coverage, or other “package plan” benefits. Recommended plan: Travel Medical Plan

Foreign Citizen Visiting the US
I’m planning on visiting the US for an extended period of time, and I want to have US-style health insurance coverage while I’m there. It is important to have comprehensive medical coverage, accident and emergency coverage, and emergency medical evacuation and transportation. I do not need trip cancellation coverage, baggage coverage, or other “package plan” benefits. Recommended plan: Travel Medical Plan

This only represents an outline of the general traveler types. Every trip and traveler is unique, and therefore has different travel insurance needs. Hopefully this gives you a general idea of the types of coverage you might need, and as you read through this guide you can pinpoint the right plan for your trip.

Section Summary

Once you know what you’re looking for in a travel insurance plan, online enrollment and purchase is very simple
Package policies are very popular because they provide comprehensive, all-inclusive coverage
Travel Medical policies are used for medical coverage while traveling abroad
Buy from a reputable company that has a good rating (more on this later)
Package plans usually cost 5-7% of the total insured trip cost, travel medical plans as little as dollars per day.