Is Travel Insurance Even Worth It? Read This Before You Decide.

Virtually every travel blog on the web seems to parrot the exact same advice when it comes to the subject of travel insurance.


“Travel insurance is absolutely essential”

“The one thing you must never travel without is travel insurance”

“If you can’t afford travel insurance, you can’t afford to travel”

We made those quotes up, but you get the idea. Travellers are constantly being bombarded with the message that travel insurance is absolutely indispensable when going abroad, and that anyone who foregoes it is reckless and irresponsible.

 

Now I’m sure that a lot of the travel bloggers that advocate travel insurance genuinely believe in its value and necessity. Many probably purchase it for themselves whenever they go on a trip.

 

But can it really be so simple, that every single traveller should safeguard himself with travel insurance, regardless of his personal circumstances and the nature of the trip in question?

 

Research by ABTA (Association of British Travel Agents) revealed that in 2017 about 22% of UK tourists admitted to travelling while completely uninsured.  

 

Obviously, there is a certain subset of travellers that isn’t convinced it would benefit from having travel insurance coverage while abroad. And maybe they’re right. Maybe they’re wrong.

 

Unfortunately, the answer to the question of whether or not you should buy travel insurance isn’t always an unequivocal “yes”.

 

In this guide to travel insurance we’re going look at both sides of the travel insurance debate to help you decide whether you should take out a policy or forego insurance entirely on your next trip.

 

But before we examine some of the most popular arguments for and against buying travel insurance, I want to briefly go over what it is and how it works.

What is travel insurance and how does it work?

Travel insurance is like most other kinds of insurance. You pay a premium (fee) to a travel insurance provider, who in exchange agrees to pay you financial compensation for certain mishaps or misfortunes that might befall you when you travel.

 

It's important to understand that insurance providers will not compensate you for any financial losses resulting from known or foreseeable events. They only cover you for the unforeseen and the unexpected incidents that occur without prior warning.

 

The document detailing the terms and conditions of the agreement is called the insurance policy and is a legally binding contract between you, the policyholder and the insurer.

 

“Travel insurance” is actually an umbrella term that refers to several different types of insurance cover, which are defined according to what exactly they cover you for.

 

Here are the main types of travel insurance cover:

Trip cancellation 

This is probably the most frequently needed type of insurance cover and in Ireland at least, it accounts for over 50% of all insurance claims.   

Trip cancellation cover reimburses you if you have to cancel a non-refundable prepaid trip because you suddenly fell ill, or because a covered family member unexpectedly died. Some policies will also cover cancellation due to illness of certain family members.


It’s important to study the policy carefully so that you know which family members are covered and which aren’t.

 

Trip cancellation cover can make a great deal of sense when you’ve prepaid a lot of non-refundable trip expenses (flights, hotel bookings, tour bookings etc.) and when the commencement date of the trip is months away. The further away the trip, the higher the odds that something unexpected will crop up before that day arrives.

Trip interruption

This is similar to trip cancellation cover except that you’re covered for any financial losses incurred from having to prematurely cancel a trip (where you’ve made non-refundable prepayments) that’s already underway, instead of one that hasn’t yet begun.

 

Sometimes there’s a condition that you have to have lost more than half of the total trip length in order to claim trip interruption. Also some insurers will only cover the costs of getting you home but won’t refund you for unused prepaid expenses.

 

Trip interruption tends to account for fewer claims than most of the other types of travel insurance cover.

Overseas medical cover

This covers unforeseen medical expenses overseas associated with injuries, illnesses and other incidents that require emergency treatment. It usually covers emergency dental treatment too. 

 

It does not usually cover expenses resulting directly or indirectly from pre-existing medical conditions (like asthma, diabetes, insomnia etc.) and it's not designed for general check-ups either.

 

One holidaymaker was left with a £30,000 bill because she did not declare a pre-existing medical condition when taking out insurance. 

Baggage loss/property cover

This covers you for accidental loss, damage or theft of your personal belongings.

 

It also usually reimburses you for any expenses incurred as a result of your checked luggage being delayed due to the fault of the airline you’re flying with. It would be easy to rack up bills replacing items that were in your delayed checked luggage if your carry-on wasn’t well stocked with essentials.

 

Property insurance can make sense for travellers that roam around with a lot of expensive gadgetry and camera equipment, but you have to read the fine print carefully to make sure that the total value of your belongings doesn’t exceed the maximum payout set by the insurer.

 

This is the category of insurance that is most prone to fraud so it has become the most difficult category of insurance to make a successful claim in. However if you have strong evidence to support your claim, you can still beat the insurance providers at their own game.

Repatriation/overseas burial cover

Having repatriation cover could save your bereaved family as much as £17,000 in getting your dead body brought home if you were unfortunate enough to die while overseas.


In the case of Britons, more than 6,000 of them die abroad every year and about nine out of every ten bodies are brought back for funerals near home. 

 

Sometimes cover for repatriation of remains and overseas burial or cremation is included under medical evacuation coverage (see below).

 

Some insurers greatly restrict payouts for repatriation so you really need to read the policy wording carefully.

Medical evacuation cover

Unfortunately you don’t actually get true medical evacuation cover with most standard travel insurance policies.

 

Most travel insurance policies have very limited evacuation cover and will only agree to transport you to the nearest acceptable medical facility, which almost always means that you’ll be treated in the same country where you got sick or injured, possibly in a hospital where few of the staff can speak English. You have virtually no control over where you’ll be taken for treatment. 

 

Proper medical evacuation cover is an additional service where you buy a membership (not a policy), and it fully covers the (astronomical) costs of transporting you home for treatment, which might require a combination of ground conveyance and flying in an air ambulance.

 

With proper medical evacuation cover, you’ll be flown home at your request to receive treatment in your chosen hospital, in proximity to your support network of family and friends, which can definitely improve the odds of recovery.

 

It’s important to bear in mind that medical evacuation cover only covers the transportation costs in getting you home, not the actual medical bills. For those you’ll need your regular health insurance, travel health insurance or some other type of cover.

 

Two reputable companies that provide medical evacuation cover are  Global Rescue and Medjet Assist.

 

With the cost of a medical evacuation usually starting at around $25,000 and potentially exceeding $250,000 (depending on where you are in the world), this is one type of cover that can really save you from a financial catastrophe.

Comprehensive cover

Also known as all-inclusive insurance, this combines most of the above types of travel insurance cover under a single insurance policy that safeguards you against most eventualities.

 

Because comprehensive travel insurance has such broad, all-encompassing coverage, it tends to be the most expensive type of travel insurance cover you can buy, but it's the one that most experts recommend.

How the premium is calculated

The basic premium you have to pay is calculated by your insurance provider and is based on a number of factors including your age, the destination(s) you’re travelling to, the trip duration, the activities you’ll be partaking in, the type(s) of insurance coverage, and other factors.

 

Age is a very important factor in determining your travel insurance premium, with premiums usually being much more expensive for the elderly.

 

Some insurers double premiums for travellers over 65 and triple them for travellers over 70. People over 75 may be flatly denied cover by some providers..

 

Most insurance policies are also highly customizable and your final premium will be higher if you add on extra items like winter sports cover, device cover, airline failure cover and so on. You may also be able to customize the excess and the coverage amount for each item.

So, is travel insurance worth it or not?

It’s not our goal to convince you that you should or shouldn’t buy travel insurance but to impartially present both sides of the debate and let you come to your own conclusion about whether it’s right for you.

 

We’re going to now take a look at the arguments that people make both in favour of and against travel insurance, adding a few of our own thoughts on the merits and validity of these arguments.

Arguments FOR travel insurance

Travel insurance affords you peace of mind.

One of the chief reasons that people buy travel insurance is because it affords them peace of mind whenever they go abroad.

 

The train of thought here is that this peace of mind is valuable enough in itself to justify the cost of the premium, and it doesn’t even matter whether the need to make a claim ever arises.

 

But what exactly is it that’s stealing people’s peace of mind in the first place?

 

Well, any number of things can go wrong when you’re travelling, and no matter how invincible, careful, prescient or responsible you think you are, you can never have complete immunity from the vicissitudes of life.

 

While it’s true that the possibility of delayed luggage or a rescheduled flight won’t keep you awake at night, there are those other much more serious (and rarer) incidents that could cause financial devastation if you were ever unlucky enough to be chosen.

 

Your appendix could one day start threatening to burst. You could contract a potentially fatal disease like malaria or Dengue fever. You could be involved in a serious vehicle accident. You could lose thousands of dollars worth of photography gear to a fire or burglary at your guesthouse.

 

From what I’ve personally observed, Dengue Fever seems to be one of the most common reasons for travellers getting hospitalized while abroad.

 

Then there are freak asthma attacks, broken backs, head-on bus collisions, collapsing glass shower doors, stolen laptops, and myriad other accidents and misfortunes that real travellers have experienced.

 

While these kinds of freak incidents are (thankfully) extremely unlikely, it’s not an exaggeration to say that they could happen to virtually anybody.

 

And while having travel insurance cover doesn’t guarantee that accidents won’t happen, it does afford people the peace of mind that neither they nor any of their close friends, relatives or family members will be bankrupted or plunged into debt as a result of the expenses incurred due to those accidents.

 

Travel insurance also gives people reassurance that they won’t die after being refused emergency medical care due to not having insurance cover or other financial means to cover the costs of  treatment.

 

It must be said however that this kind of occurrence is extremely rare and there is legislation in place in most countries to protect impecunious people from being denied treatment in the case of medical emergencies.

 

In the USA for example, there is the Emergency Medical and Treatment Labour Act (EMTLA), which forbids the denial of care to impecunious or uninsured patients because of a lack of ability to pay.

 

This law applies to both public and private hospitals in any case where emergency care is required, but does not apply to non-emergency situations.

 

Of course, the lack of any clear definition of what constitutes “emergency” medical care means that people in dire need could still potentially be refused treatment on the claim that their condition was non-critical.

 

The bottom line is that having the safety net of travel insurance can definitely help to put some people’s minds at ease whenever they go abroad, and many find that mental serenity valuable enough to justify the cost.

Travel insurance lets you take more risks

Another benefit of having travel insurance cover is that, in theory at least, it eliminates the financial repercussions that would normally arise from taking a risk and having something go wrong.

 

When you’re not covered by travel insurance and you only have a small amount of savings as a buffer against bankruptcy, you’re forced to play the game of travel more cautiously and take fewer risks.

 

But when you take out travel insurance, you suddenly have access to an enormous pool of money to buffer you against financial catastrophe.

 

With this new safety net to catch you if you fall, you’re able to live life in a more intrepid manner that doesn’t reflect your true means, and you’re able to take risks that you wouldn’t normally be able to afford to take.

 

And why is it beneficial to be able to take risks that you wouldn’t normally be able to afford to take?

 

Well we all know that risky behavior often comes with rewards. For example, speeding is risky but the reward is that you save time and perhaps have more fun driving.

 

Taking thousands of dollars worth of high-end photography equipment abroad is risky, but the reward is that you can get some truly stunning photographs.

 

Of course, travel insurance companies are well aware that policyholders might try to take advantage of their newly acquired financial safety net by taking more risks and behaving less responsibly than usual.

 

Insurance policies come with all kinds of exclusions that deny claims to travellers who could be in any way blamed for an incident due to negligence or carelessness.

 

Nevertheless, there is an allowance in most travel insurance policies for a certain degree of incautious behaviour that won’t jeopardize your ability to make a claim if something should go awry.

 

Having travel insurance can definitely allow you to live life closer to the edge and still not be penalized for it. 

People who don't buy travel insurance and then take advantage of free medical care funded by taxpayer's money are selfish

This is a moralistic argument against not buying travel insurance.

 

It postulates that it is selfish and unfair to travel without insurance and then when something happens to you, expect to be bailed out with free healthcare funded by taxpayer’s money.


Well, this argument definitely has some merit, especially if you’re not contributing anything to the free healthcare systems that you’re benefiting from.


But then again, what if you are happy to let foreigners that don’t pay any taxes towards your own country’s free healthcare system avail of it anyway, so long as they are happy to let you avail of theirs?


It is often possible to reciprocate in more ways than we imagine.

Travel insurance is a mandatory entry requirement for certain countries

Another argument in favour of travel insurance is that certain countries have made it a mandatory requirement for tourists.

 

There does seem to be a bit of a growing trend here, with quite a few new countries jumping on the mandatory travel insurance bandwagon in recent years.

 

Countries make travel insurance compulsory in order to protect themselves from travellers who only visit the country to take advantage of the free healthcare system, or who flee hospitals with unpaid medical bills.

 

So far, travel insurance (that includes medical and evacuation cover) is a compulsory requirement for all Schengen visa applicants and apparently you need a valid travel insurance policy (that includes medical insurance) to enter Cuba too. The UAE has made health insurance compulsory for anyone who wishes to enter the country.

 

Comprehensive travel insurance is also compulsory if you’re going on a cruise to Antarctica.

 

For more information on the matter, check out this article.

Arguments AGAINST buying travel insurance

Truly unforseeable and unavoidable accidents are extremely rare

There may be a significant number of travellers that claim to have had unavoidable mishaps every year, but if you examine these cases closely, you’ll find that in many instances the traveller was partially at fault by not exercising the power of foresight or taking enough precautions to minimize risk.

 

Of course, unpreventable accidents still can and will happen, no matter how meticulous your planning and preparation is, and regardless of how much caution you exercise.

 

You can do everything right and still be the victim of a terrible stroke of bad luck. Sometimes it’s just a matter of being in the wrong place at the wrong time.

 

Incidents like earthquakes, volcanic eruptions, tsunamis, typhoons, riots, terrorist attacks, train derailments, bus collisions, plane crashes and the like can be completely random and indiscriminate, and can occur without prior warning.

 

But these types of completely random incidents that we have absolutely no control over are also exceedingly rare.

 

In four years of uninterrupted travel in Asia I experienced zero major earthquakes, zero volcanic eruptions, zero tsunamis, one super typhoon (which wasn’t so bad), zero riots, zero terrorist attacks, zero train derailments, zero bus collisions, zero plane crashes and no medical emergencies. I did have to get some important dental work done in India but it wasn’t an emergency.

 

Now maybe I was just unusually lucky, but there are countless other people who have travelled for years on end without experiencing any major freak incidents.

 

The truth is that the mishaps most commonly experienced by travellers are the preventable type.

 

For example, many backpackers badly burn their calf on the hot exhaust pipe of mopeds (the resulting mark is often referred to as a Thai Tattoo, Vietnamese tattoo or Southeast Asia tattoo), but this kind of incident could easily be prevented by wearing a pair of long pants whenever you drive a moped, or by just being more generally mindful and aware of your surroundings.

 

Even seemingly random incidents like bus crashes aren’t entirely governed by external forces. Travellers still play a role.

 

By doing your homework and researching the different bus companies and their safety records for a route before you travel, you can choose the safest operator each time and minimize the likelihood of being involved in an accident.

 

In summary, the argument posits that if people take enough responsibility for everything that happens to them while travelling, the odds of disaster become low enough to risk travelling without insurance. 

Having travel insurance makes you behave less responsibly

As we mentioned earlier, many travellers have their own personal tale to tell about how their travel insurance policy saved them from incurring a major financial loss on one or more occasions during their travels.

 

But could it be that the likelihood of having such a story to tell is skewed towards those that travel with insurance?

 

In other words, does having the safety net of travel insurance make us more careless, less averse to taking risks and more likely to become the victim of a calamity during our travels?

 

It is true that the fear of financial loss is a powerful disincentive against careless or reckless behavior.

 

There are of course other psychological deterrents against irresponsible behavior like the fear of loss, pain, injury, death or legal repercussions, but having travel insurance cover largely eliminates (at least we tend to believe it eliminates) one of these disincentives – the fear of financial loss.

 

With one less negative consequence for our actions, is it unreasonable to assume that we might be more likely to take certain chances that we wouldn’t have otherwise taken?

 

Let’s take a hypothetical example of a backpacker – we’ll call him Joe -  who’s sitting on the fence about joining a 30-day guided group jungle trek in Borneo

 

Joe is generally inexperienced when it comes to hiking and the outdoors, and he’s completely unfamiliar with the tropical rainforest environment.

 

It’s a well-founded fear that’s holding him back because he doesn’t really know what hazards might await him on the trek (mosquitoes, venomous snakes, spiders, heat exhaustion etc.) and how to avoid or deal with them.

 

But he eventually decides to buy travel insurance and that gives him the artificial boost of confidence he needs to commit to doing the trek that he otherwise wouldn’t have committed to out of not feeling fully prepared for it.

 

The insurance gives him some peace of mind because he knows that if something does go terribly awry - maybe he sprains an ankle, gets an infection, contracts malaria or whatever, he knows that at least he’ll be covered for any emergency hospital bills or even evacuation if it comes to that.

 

Of course this was only a hypothetical example, but it helps you to imagine how having travel insurance cover might give somebody just the boost of confidence they need to partake in something that they would otherwise be very hesitant about.

 

You may have also heard of the theory of risk compensation, which posits that people tend to behave less cautiously when they feel protected and more cautiously when they sense greater risk.

 

For example, some studies have found that people drive faster when they’re wearing a seatbelt, or drive closer to the vehicle in front when their vehicle was fitted with anti-lock brakes.

 

Other examples of risk compensation include condoms encouraging people to engage in riskier sex (like with a person who has an STD), or how wearing boxing gloves may make people punch each other harder in the head (the person throwing the punch perceives a lower risk of a hand injury), thus heightening the risk of brain damage.

 

This phenomenon of risk compensation has caused a bit of a conundrum for road safety authorities that wish to reduce road fatalities but find that people’s tendency to behave more carelessly when new safety measures are introduced can offset the effects of those measures.

 

The theory of risk compensation should also surely be applicable to travel insurance, since insurance is a type of safety net that makes people feel less vulnerable.

 

But there’s also another reason why having travel insurance cover might make some people more prone to behaving carelessly.

 

It has to do with the fact that travel insurance only proves itself to have been a worthwhile investment when you actually need to make a claim.

 

If you never make a claim on your insurance you won’t get back any of the money that you invested and all those premiums you paid to your insurer will appear to have been a waste of money.

 

Since all people desire a return on any investment they make, and since you only get a return on your investment in travel insurance when something goes wrong, there may be a subconscious script running in some people’s minds that causes them behave irresponsibly.

 

Then when something inevitably goes wrong as a result of the traveller’s careless conduct, he gets to make an insurance claim and can finally justify his investment in travel insurance to himself and others.

 

So in summary, this argument posits that having travel insurance will make you behave less responsibly, and that the increased proneness to misfortune will negate the benefit of being insured.

Travel insurance does not benefit every traveller equally

It is an obvious fact that some travellers will claim from their insurance providers more than others, and this discrepancy has to do with the fact that some individuals are inherently more accident-prone – or intentionally more accident-prone than others.

 

Statistically, travellers who take fewer precautions are going to make more claims on average than the more risk-averse travellers and they will therefore receive the lion’s share of the payouts from the insurance provider.

 

It is also undeniable that some people are just inherently clumsier and more accident-prone than others, even if they have a responsible mindset.

 

It is also a sad fact that dishonest, unscrupulous travellers often benefit more from travel insurance than their more honest peers, although they may eventually get caught out by their insurer for making fraudulent or exaggerated claims.

 

If they do get caught the consequences can be severe, with heavy fines and prison sentences a real possibility in some countries.

 

However, in the short-term at least, many travellers do appear to be getting away with making false claims, which often results in insurers having to raise premiums.

 

In recent years there has been a trend among British holidaymakers of making false claims against their tour operators for food poisoning.

 

But the majority of false travel insurance claims centre around “lost” items, which in reality are items the claimant either still has in their possession or never possessed in the first place.

 

A common ploy is to add imaginary items of high value (like a mobile phone) to a bag that was genuinely stolen.

 

Another common type of fraudulent claim involves travellers colluding with local physicians and surgeons, who are happy to cooperate with travellers in exchange for a cut of the payout from the insurance company.

 

How it normally works is that the traveller will go abroad to receive discounted cosmetic surgery (liposuction, hair transplant, nose job etc.) and then forge a false report of a medical emergency with the aid of the doctor that performed the surgery.

 

With so many people milking the insurance companies for all they’re worth, it’s understandable that more circumspect travellers (who have empirically observed that they rarely ever need to make insurance claims) may feel that they will not benefit from a travel insurance policy as much as some of their counterparts. 

Having travel insurance doesn't guarantee a successful claim, even if you deserve compensation

Even though travel insurance is designed to mitigate the risk of financial loss, there is still the significant risk that the insurance company won’t pay out when you make a claim.

 

Insurance policies come with a long (often 15,000 + words), complicated list of stipulations and exclusions, which demand that many criteria be fulfilled for a claim to stand a chance of being successful.

 

For example, if a thief stole your entire luggage, but you can’t produce the original receipts to prove that you are the owner the stolen items, or you have no photos of you with the stolen items, and you didn’t get a police report within 24 hours of the incident, the insurance provider may deny your claim.

 

Claims for stolen belongings can also be denied if you left them unattended at any point, or if they were stolen from your hotel room when you had the option of keeping them in a locker or safe.

 

There are also usually limits to the amount of compensation you can receive for the different types of cover.

 

Of course, this is all fair enough, and it’s your responsibility as a traveller to read the small print of your insurance policy very carefully, so that you understand exactly when you are and aren’t covered and what evidence you need to provide to make a successful claim before committing.

 

But the problem is that even when you do satisfy the criteria for making a successful claim, it still isn’t always that straightforward to get the money that you’re owed.

 

In fact, in some cases, the process of making a claim could almost end up being more trouble than its worth, especially when the claim is for an insubstantial amount of money.

 

The problem is that it is not in an insurance company’s interest to pay you. The company’s goal is to maximize profits and one of the ways it does that is by minimizing the amount of money it pays out in claims each year.

 

Making a successful insurance claim can be a very daunting task. All the burden of proof is on you and the company can decide not to entertain you or accept the evidence that you provide for any reason.

 

Insurance companies will often use every excuse and every loophole they can conceive of to avoid having to pay you.

 

They may deliberately delay your claim in order to wear you down, hoping that you’ll soon give up. Because of these psychological games that insurance providers play, many claims can take policyholders months to finally win.

 

Another tactic that companies use is to give the policyholder an outrageously low settlement offer, which can be so demoralizing that some people just throw in the towel.

 

You may have to fight tooth and nail just to get the money that you deserve.

 

You may have to ask to speak to managers and other people in high positions in the company.

 

It might be like trying to get blood from a stone but eventually, if you’re in the right and can provide all of the necessary paperwork, you should get the money you’re owed.

 

However, the often-onerous process of making a claim is enough to turn some people off travel insurance entirely and make them consider it to be more trouble than it’s worth. 

Travelling abroad is no riskier than everyday life back home, so why do I need travel insurance?

This is an argument against travel insurance often made by full-time travellers and digital nomads who have made travel their permanent lifestyle.

 

Such individuals usually move around the world at a very slow pace, often spending months in each country they visit along the way, living in a similar fashion to the local people and often taking up work in the country, or working online as freelancers.

 

If you’re in this boat you may feel that life abroad is no riskier than life back home, and so you question the value of taking out travel insurance.


Maybe you actually travel infrequently, so you don’t need all that protection for baggage delays, baggage loss, trip cancellation and so on.


Maybe you’re in a foreign country where you feel much safer and less at risk of crime and theft than you felt back home.


Maybe you’re travelling in countries where you can get free or extremely inexpensive healthcare, so you don’t see the point in getting overseas health cover.


There is definitely an argument to be made for not needing travel insurance in cases like these.

It's not a sound long-term investment for most people

In the short-term, travel insurance can really benefit people financially and save them from acute financial loss, but if we look at the long-term trend, buying travel insurance will result in a net loss for the majority of people.

 

In other words, it’s highly likely that you’ll get far less money back in claims than you paid out in premiums, especially over a timescale of decades.

 

One of the key reasons for this is that you’re dealing with a big company that wants to make a profit and has high operating costs like staff wages, rent, utilities, advertising and so on.

 

If we assume about 20% (a not unreasonable figure) of the money paid in through customers’ insurance premiums is consumed by profits and administrative costs, that leaves only 80% of it available to be paid out in claims.

 

This means that on average everybody only gets back about 80% of their investment.

 

However, this average figure belies the true distribution, since in practice there is the very responsible, honest majority that rarely ever has to make a claim, and the minority of less responsible or unscrupulous folks that always seems to be putting in some claim or another. 

 

So in reality, over the long-term the responsible majority probably loses a lot more than 20% of their investment while the less cautious minority either break even or makes a gain on investment.

 

It might be hard to see how anybody could ever gain from an investment in insurance, since an insurance claim only ever protects you against financial loss, rather than actually improving your current financial position.

 

But if you think about how your financial position would have changed if you didn’t make that insurance claim - you would have lost a lot of your savings or possibly been plunged into debt – so to still be in the same financial position despite having incurred major expenses is actually a type of gain or a regaining of a financial position that you should no longer have.

 

Anyway, the argument here against insurance is that it is not a sound long-term investment for most responsible people, even if it can be very beneficial in the short-term.

Medical care is much cheaper (or free) abroad

This is a popular argument against buying health insurance cover when travelling overseas.

 

It is certainly true that medical treatment can be drastically cheaper in some countries when compared with others.

 

While a night in an ICU (intensive care unit) could cost you €5,500 in the U.S.A where medical care is absurdly expensive, the same thing might only cost you 1,500 INR (€18.51) or less in an Indian Government hospital.

 

This is why the phenomenon of medical tourism exists - because treatment can still be significantly cheaper overseas, even when factoring in the cost of the return flight to get there and back.

 

It’s not just the savings that attracts people either; sometimes people receive better quality treatment overseas too.

 

Some of the top medical tourism destinations in the world include Malaysia, Thailand, Singapore, South Korea and Taiwan.

 

When it comes to dental tourism, India arguably has the best quality-to-price ratio of any country in the world. Two root canals and a surgical wisdom tooth extraction only set me back about $250 at a dental clinic in India.

 

Many Americans like to head to neighbouring Mexico for high-quality dental treatment at a fraction of the normal cost.

 

Thanks to Europe’s universal health care system, citizens of EU member states travelling within the EU/EEA can avail of free or discounted state-provided healthcare if they possess a European health insurance card (EHIC).

 

Even in Thailand many tourists, expats and other foreigners without travel insurance have been able to get free treatment in public hospitals. 


The treatment in these hospitals is not always supposed to be free but patients are normally looked after regardless of their ability to foot the bill.

 

With travellers being able to avail of free or cheap healthcare in many foreign countries, it is understandable that many don’t always see the value in getting overseas medical insurance cover.

 

However, it’s important to remember that even in countries with low-cost medical treatment, hospital bills for very serious injuries and illnesses can still run into the thousands or even tens of thousands of dollars, and you may not always be able to get away with not paying.

Travel insurance doesn't cover high-risk situations and activities

Another common argument made against travel insurance is that it seldom covers you for those high-risk situations and hazardous activities for which you need it most.

 

Unfortunately, most travel insurance policies only cover you for “normal”, everyday, low-risk travel situations.

 

The irony is that in many situations where you’re likely to think to yourself “hey, I could really do with that travel insurance cover right now”, your insurance cover is suddenly void and you’re unprotected.

 

Adventurous activities like touring a country on a motorcycle, riding a horse, skiing, scuba diving, white-water rafting, rock climbing, bungee  jumping, mountain biking, surfing, skydiving, trekking at high altitudes and many others are frequently excluded in standard travel insurance policies.

 

All that said, some insurers will give you an option to buy additional cover for more hazardous activities and scenarios, but this will usually bump up your premium significantly.

 

Also, if your insurer just doesn’t let you add cover for adventure activities, there are several providers that specialize in this type of insurance cover.


One insurer that does provide cover for an impressive range of  adventure activities is World Nomads.

 

While it is understandable that some insurers just don’t want to cover hazardous activities period, (probably because it’s extremely difficult to accurately assess the degree of risk for these activities), it has left some travellers feeling that most travel insurance policies are a waste of money, since it only covers situations where travellers feel they don’t need it.

I already have a card that covers me when I go abroad

It's true that some credit cards and debit cards can provide pretty decent travel insurance coverage.

 

European and UK travellers, for example, can get fairly comprehensive travel insurance cover with an N26 Black debit card.

 

With this card you get cover for trip cancellation, trip curtailment, flight delays, luggage delays, repatriation, emergency medical expenses, accidents, extended warranty, muggings and mobile phone theft.


Another huge perk of the N26 Black card is  unlimited free non-Euro ATM withdrawals abroad.

 

N26 is a mobile-first bank that has revolutionized banking for travellers by offering lower fees and using the Mastercard exchange rate (with no markup added) for foreign currency card payments. 

 

For more on banking in N26 see our in-depth N26 review.

 

But while it's nice to have insurance cover with your credit or debit card, you do have to be careful if you’re going to rely it as your only protection.

 

For starters, most of these insurance policies associated with a credit or debit card will stipulate that you must pay for the entire trip with the card in order to be able to claim any compensation for an incident.

 

Also, credit card insurance policies can have a lot of exclusions, low payout limits and other rules, so you really have to read the fine print to make sure you’re covered for what you think you are.

 

Nevertheless, there are some cards out there with decent travel insurance cover and if you have one of those, it’s understandable that you can’t see the point in buying cover from a dedicated provider.

Buying travel insurance is the same as gambling

Some people don’t buy travel insurance because they argue that there’s no difference between it and gambling.

 

With gambling you’re risking a sum of money in order to gain additional money. If you lose the bet, you lose your stake but if you win, you get your stake back plus some winnings (profit). In gambling, it’s common to win a small amount of money but it’s rare to win big.

 

With travel insurance, you’re betting a small sum of money (the premium) that you’ll have a mishap during your trip. If nothing goes wrong during the trip you lose the bet and your stake (the premium).

 

If things do go pear-shaped, you win the bet and get a payout, which will normally be a small amount of money but in some cases it will be a very large sum of money.

 

Well, when we look at it this way, it’s definitely easy to see that there are strong parallels between buying travel insurance and gambling.

 

However, a major difference with buying travel insurance and gambling is that you don’t want the bet to win with insurance, since the payout only ever comes after you’ve incurred undesirable expenses. With gambling you always want your bet to win.

 

It could also be argued that not buying travel insurance is a kind of gambling. One way of looking at it is that when you don’t buy insurance you potentially risk a huge amount of money in order to save a small amount of money (the premium).  

So when is travel insurance worth it (and when is it not)?

After reading through all the arguments for and against travel insurance above, you should have a much better understanding of the subject of travel insurance and the different lenses through which people view it.

 

Below we’ve distilled the essence of all the above arguments to provide an answer to the most pressing question of all; when is travel insurance really worth buying and when is it not?

  • If you have a history of being clumsy or accident-prone, or you think you have a weak immune system, you probably shouldn’t skip the overseas health insurance. Just remember that you probably won’t be covered for any mishaps resulting from behaving foolishly while under the influence of drugs or alcohol.    
  • If you’re carrying around thousands of dollars worth of electronics, gadgets or photography equipment, it might not be a bad idea get cover for damage, loss or theft your personal belongings. If it’s just a few hundred dollars worth, you’ll probably be okay without it.
  • If you’ve paid for an expensive trip well in advance of the start date and most of the payments and deposits that you made are non-refundable, it might be prudent to get trip cancellation and trip interruption insurance. People tend to spend much more on international trips (vs domestic) and will book them further in advance to get the best flight deals, so generally it makes more sense to buy cancellation cover for international trips but you can often skip it for domestic trips. 
  • If you’re planning to do any really hazardous activities where one simple error could result in serious injury, it’s probably wise to buy extra cover for those things.
  • If you don’t have a debit or credit card that provides appropriate cover for your trip, you might want to buy travel insurance
  • If you’re travelling to countries where healthcare is very costly and where you can’t avail of free or heavily discounted treatment, then overseas medical cover would not go astray. If it’s a domestic trip, you’re probably already covered by your normal health insurance so you may not need to buy extra medical cover.
  • If you’re not rich and you don’t have a considerable sum of money saved up to absorb heavy financial blows while abroad, travel insurance will make more sense for you than for someone who does have a reserve built up.

How to choose the best travel insurance provider?

If you’ve read this far and you’ve decided that travel insurance will be worthwhile for you, you may now be wondering which provider you should choose.

 

The problem with choosing a travel insurance provider is that, even if you know what to look for, there are literally hundreds, if not thousands of different insurers to compare. Travel insurance is a multi-billion dollar industry and everyone wants a slice of the pie.

 

Do you really have the time or the motivation to go through the 15,000+ word policy documents of hundreds of different travel insurance providers to figure out which one is the best option? Your head will start to hurt before you get halfway through even one of those policies.


It’s easier in this case to try to identify a reputable provider that’s endorsed by many other reputable brands and companies in the travel space.


One provider that stands out from all the others, and that has served travellers very well for over two decades is World Nomads. 


But one travel insurance provider that stands out from all the others, and that has served travellers very well for decades is World Nomads.

 

The Australia-based company was actually built by a former nomad called Simon Monk, so they really understand the needs of travellers from first-hand experience. They’re endorsed by National Geographic, Lonely Planet, Rough Guides and several other big players in the travel sector.

 

One of the major reasons for the popularity of World Nomads is the fact that they provide very broad insurance cover at a low cost.


Even their cheaper plan includes cover for risky adventure activities, medical evacuation and repatriation, and cover for injuries, trip cancellations and trip interruptions resulting from unexpected natural disasters.

 

Another reason so may people choose World Nomads is that they let you take out and renew insurance policies online while you’re  travelling.

 

This is an important advantage because many other insurers only allow you to take out an insurance policy before you leave home.

 

World Nomads have a very simple pricing model with just two plans, a basic plan and a more expensive explorer plan, which covers you for more eventualities than the basic plan and also bumps up the coverage limits considerably.

 

While World Nomads will serve the needs of the vast majority of travellers, if you’re a very intrepid nomad and you like to visit particularly offbeat or dangerous countries like Pakistan, Iraq, Syria, Afghanistan, South Sudan, Egypt, Libya, Somalia and so on, a better travel insurer for you might be First Allied.

 

This is because World Nomads doesn’t cover countries that have a travel warning issued against them by the Department of Foreign Affairs, the WHO or other similar governing bodies.


First Allied on the other hand actually specialize in providing cover for people working in or visiting high-risk countries and regions. The only problem with First Allied is that they don't provide cover for people who are resident in the USA.

Conclusion

Travel insurance is one of the most important topics relating to travel but it’s also quite a complex and confusing topic that many travellers don’t fully understand.


There so many pros and cons to weigh up and it can be really hard to know when you should and shouldn’t buy travel insurance.

 

Hopefully reading through this article has cleared up most of your questions, doubts and misconceptions surrounding the subject of travel insurance and you now feel ready to make wiser, more informed decisions about buying it in the future.


Do you normally buy travel insurance or do you think it’s usually a waste of money? What’s your number one reason for buying or not buying travel insurance? We’d love you to leave us a reply in the comment section below!

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