How Does Travel Insurance Work And Why Is It So Important?

Do you have $25,000 to spend next week?

I didn’t think so.

If I hadn’t bought the best cheap travel insurance beforehand, I might be bankrupt by now.

You don’t have to spend thousands to get the best travel insurance but you do need to do some research to make sure you’re well protected.

Without travel medical insurance, you might wake up in hospital wondering where you are and why someone is shoving forms in your face and looking grim. 

In this article I’m going to show you how low-cost travel insurance turned a potentially deadly situation into a mild concern, and answer those all-important questions: How does travel insurance work? What do I look out for? And where can I find the best cheap travel insurance?

And please – don’t forget your travel insurance before you go! I recommend SafetyWing if you’re 69 and under. If that birthday has come and gone, click here for travel insurance that covers you at any age.

What is travel insurance?

Simply put, it is a type of insurance that covers you for medical expenses, accidental death or disability, lost or stolen luggage, liability cover and expenses if you incur a financial loss due to delays, cancellations or rescheduling. (Note, though, that not all insurances cover everything in every circumstance!)

Since no two policies are the same, you need to make sure you’ll have adequate cover before you buy a policy. What is or isn’t covered can greatly affect travel insurance cost, but you’ll easily be able to find cheap travel insurance policies that are more than adequate for pretty much any trip you have in mind.

People arriving from a flight

Why buy travel insurance?

I’ve met travelers who advocate saving a few pennies by focusing on prevention and natural remedies rather than buying insurance.

“I’ll be careful,” they say.

“I’ll behave in a healthy way,” they say.

If you have a head-on collision with a bus, no amount of prevention or herbal remedies will set your bones or see you through intensive care. You’ll be wishing you’d equipped yourself with the best and cheapest travel insurance – hell, not even the cheapest. When you’re lying on that hospital bed, funny how the word “expensive” changes meaning.

Any talk of vacation insurance and travel protection always reminds me of my father. A good Middle Easterner, he was highly superstitious. He wouldn’t buy life insurance because he feared it would bring on death. When he did eventually die, my mother had to pick up a lot of pieces and endure quite a bit of pain because he hadn’t planned for the future.

International travel medical insurance is no different. Not buying it because it “might” bring on disaster is a bit naive; I’m always amazed to meet travelers who put their faith in… luck.

8 reasons to buy medical travel insurance


  • You might get sick or have an accident. Unless you’re rich, this could set you back tens of thousands, even hundreds of thousands of dollars.
  • A travel insurance policy gives you peace of mind. If you do get sick, eat something that makes you ill, have an accident or fall off a cliff, someone will be there to help.
  • If you’re in a foreign country where you don’t speak the language, someone with medical knowledge will be able to speak directly to the hospital and prevent any major mistakes.
  • The airline might damage or lose your luggage (oh yes, that’s happened several times to me) or someone might steal it.
  • You may get turned away from a hospital if you’re not insured. 
  • What if you’re in a developing country with poor health infrastructure and you need to be evacuated? Care to pay for that flight yourself? Especially if a medical specialist has to accompany you…
  • What if during your dream winter holiday you have a serious accident? The right policy will cover you for ski insurance or snowboarding travel insurance (if you still practise those sports – I do not, being more of an ‘après-ski’ person).
  • Things happen. What if you have to cancel your trip? And you’ve paid for a round-the-world ticket? Having a policy that includes flight insurance or trip cancellation insurance can turn that vacation nightmare into a mere rescheduling.

Exactly how does travel insurance work?

Travel insurance is simple. You find the travel insurance company of your choice (and I’ll go into detail about how to choose the best option for you below). Then you fill in a form and get a free quote.

You can then choose to go for it, or not. 

Once you have the travel insurance, you can file a claim on any financial losses you experience while traveling. When your claim is approved, you will be reimbursed or the bill paid directly. Filing a claim includes submitting proof of your loss, so this is very important to keep in mind – never throw away the slips!

The fee you pay (or ‘premium’) depends on your destination, your age, the length of your trip and your planned activities. You’re covered for unforeseen events and emergencies – routine checkups and the like are not included, even if you want to have them while traveling. Basically, it’s not a replacement for health insurance.

And yes, claiming a reimbursement can be a bit of a process. There’s paperwork involved, and you need to have your ducks in a row (and by ducks I mean slips). But it’s well worth it when something goes wrong. 

Calculator and bill

Questions to ask when deciding on the best international travel insurance

There are plenty of cheap travel insurance international policies out there with decent coverage, so choosing the most suitable can be difficult, especially since they’re all out to court your business.

Ask these basic questions to help you find the best holiday insurance for your needs.

  • How old are you? There aren’t too many over 60 travel insurance policies out there. (This unfortunately goes for World Nomads as well, which stops its coverage somewhere between 65-70, depending on where you live.)
  • How healthy are you? It can be tricky to get travel insurance with medical conditions you already have. Most travel insurances won’t cover pre-existing conditions.
  • Where are you from? Buying multi-trip insurance in New Zealand will have a different price tag and cover than single travel insurance bought in the US.
  • How long is your trip? You can get annual worldwide travel insurance for a year, or short-term travel insurance for a few days. The price, of course, won’t be the same.
  • Where are you going? Policy prices can differ radically depending on whether you’re heading for a war zone or angling for a tan on the sand.
  • What kind of trip are you taking? A gentle trek with a tour group is far less risky, from an insurer’s point of view, than base jumping or bungee jumping, and your policy will be priced accordingly.

Best cheap travel insurance benefits to look for

Not all holiday health insurance cover is the same and reading the fine print, however painful, can save you a lot of money, time and frustration.

So here’s what to look for.

  • Value for money, but that goes without saying. Why spend more than you have when a good cheap travel insurance package will do the job? There are plenty of cheap holiday travel insurance policies available, some better than others. Don’t only go for the cheapest travel insurance – shop first!
  • Easy access, especially the ability to buy international travel insurance online. The best international travel insurance policies should also be easy to understand, easy to claim and easy to use (for example, if it pays your expenses directly instead of making you front the expenses and wait for reimbursement).
  • Valid pretty much everywhere. You don’t want the one place you’ve set your heart on visiting to be the one that isn’t covered, do you? Some holiday medical insurance will have no-go zones but the fewer the better.
  • Special or high-risk activities. Most travel and health insurance policies exclude special or risky activities, so double-check this. If you plan to take part in adventurous activities, pay the extra to ensure you’re protected – but only IF you plan to engage in them. Otherwise, skip the special adventure travel insurance coverage
  • No silly constraints – like we’ll cover you only if you happen to trip over a pebble while walking on grass – but if you were running, we consider that a ‘dangerous’ activity. You’re not traveling to stay locked in your hotel room so you do need to be covered when you have a bit of fun! 
  • Flexibility. What if you change your mind and want to keep traveling? I’ve been known to lengthen a trip on the spur of the moment so extended travel insurance is important to me.
  • Length of cover. Make sure your overseas insurance covers the full length of your trip. Many travel insurance plans are only valid for a few weeks or months, not convenient if you’re contemplating a round-the-world trip and need long-term travel insurance.
  • Solid medical coverage, especially in expensive countries. The best travel insurance for USA should cover you for US$ 1 million at least. Hospital bills mount quickly and you’d be amazed at how expensive a serious accident with lengthy rehabilitation can be, especially if you don’t have family to help out.
  • Basic coverage like travel cancellation insurance, cover for damaged or lost luggage and personal effects and if possible, personal liability insurance (although you may already have this through your home insurance policy). Coverage for electronics is typically low with most overseas travel protection insurance policies, even those that include laptop travel insurance,  so you’ll probably need to get extra cover from another company, unless your household insurance covers your gear.
  • Repatriation and 24-hour a day assistance in an emergency. The best travel health insurance policies will include this option: if you can’t get appropriate medical treatment where you are, you’ll be flown to where it is available, or even home if that’s the best solution. You’ll also be accompanied by medical staff if you can’t travel on your own. And if you phone them in the middle of the night, you won’t get a robot asking you to “press 3 if this is an emergency”.
Jumbo jet at the end of the runway

So here’s what happened to me

I don’t want to sound alarmist but an unexpected gallbladder infection during a trip to the US cost me more than $25,000. What would I have done without my overseas travel insurance for USA?

cheap worldwide travel insurance - operation in hospital
The last thing I remember was taking a cab to the airport in Washington DC after visiting my brother and his family. And then, THIS. Eight days and $25,000 later, I was released and finally went home

We tend to think “those things” will only happen to us in rural Africa or on top of an Asian mountain. But no. When I had my health emergency, I was doing the most banal thing in the world: taking a cab from Bethesda to Washington DC’s Dulles international airport. Doesn’t get much more mainstream…

But before visiting the US I had searched through every cheap medical insurance available because I’d heard horror stories about medical costs in the US – as in the most expensive in the world.

I really didn’t expect anything to happen to me but then, I woke up in intensive care, with my cool but very worried brother hovering over me.

More than a week later and minus a gallbladder, I was allowed back to my brother’s spare bedroom, but it would take another three weeks before I could fly. I had plenty of time to mull the “adventure” and be grateful for my decent travel insurance coverage.

I hardly had to do a thing beyond scan and email some medical bills. They kept coming, with lots of zeroes, and I kept forwarding them.

So whatever your trip requires – single trip travel insurance, multi-trip travel insurance or annual travel insurance – please don’t assume you won’t need it. Spend a few dollars on that affordable travel insurance. If something does happen, you won’t have to mortgage your house or disinherit your kids.

Security in every situation

As soon as I know my dates and destination, a comprehensive travel insurance policy is the first thing I buy. And it has served me well.

There was that costly incident in Washington.

And then there was this, below. A strange growth on my forehead that spread enough to worry me seriously. I happened to be in Santiago de Compostela, Spain, far from home.

Again, I didn’t have to pay.

I don’t need convincing: I buy travel insurance – I recommend a  World Nomads policy – each time I leave the country, period. I’m not particularly accident-prone but I don’t want to spend the rest of my life paying off emergency surgery. (I’ve just reached the age the cut-off point and sadly have to switch insurance companies, but all those years of fidelity to World Nomads served me well.)

Bandaged forehead - fortunately I had health insurance
Amazingly flattering selfie after three hours in the emergency ward in Santiago de Compostela, looking a lot better coming out than I did going in (you’ll have to trust me on that)

What is the best travel insurance?

We all have our favorites, so here’s why so many people (myself included) consider World Nomads the best trip insurance for international travel if you’re under 70 (or 66 in some countries).

  • One of the reasons I like World Nomads is because its founder is a former backpacker and traveler, who understands the needs of independent travelers, myself included.
  • It’s one of the best affordable travel insurance policies around in terms of value for money.
  • It provides long-term yearly travel insurance. You can be covered for up to 18 months and that’s essential if you’re a long-term traveler looking for nomad travel insurance or backpacker travel insurance.
  • You can extend international travel insurance online. I’ve done it often – it takes about 60 seconds. 
  • If something happens to you, you can also put in your claim online.
  • You don’t have to buy it in your country of origin. Anyone who has ever tried to buy trip travel insurance outside their own country will appreciate how important this is.
  • Any insurance that covers bungee jumping and kite-surfing can certainly cover most of my basic needs (only in some countries, though, so check first). And on the off-chance I ever decide to kite-surf…
  • This is a company created by travelers for travelers, so I don’t feel my needs are being sacrificed on the corporate altar. 
  • Corporate conscience. An important issue for me is giving something back to the communities I visit. World Nomads has a philanthropy network and funds development projects around the world, and I like a company with a conscience.

So where’s the catch?

No holiday insurance cover is perfect for everyone, but this one does come pretty close, at least for my needs. 

BUT, you may want to shop around elsewhere if…

  • …if you’re past the age limit. Like most travel insurance deals, World Nomads unfortunately assumes you won’t be an adventure traveler much after retirement, or covering seniors simply costs too much. (I love them but they’re wrong on this one!) If you’ve been on the road any length of time, you’ve seen those spry 80-year-olds whipping by uphill and leaving you in the dust. If you’re one of those, World Nomads is not for you.
  • …if you plan on carrying a huge number of valuables with you, in which case you’ll have to find special insurance for that diamond-studded iPhone.
  • …if you’re driving your own car, in which case it might be worth shopping around for a recommended travel insurance that covers both you and your vehicle. Most travel insurers, including World Nomads, do not cover your car.
  • …if you plan to undertake any high-risk activities not covered by the policy – and this is why you have to check the fine print.
  • …if you need coverage in your home country. Remember that this is travel insurance, not home insurance, so your coverage only starts once you leave your country. If your bags get stolen while you’re waiting for your flight, you’ll have to claim from your home insurance policy.
  • …if you already have travel coverage from a national health insurance plan in your country, or from a private health insurance plan, your credit card or your home insurance.
  • …if you’re planning on breaking the law, you won’t be covered by World Nomads or by anyone, for that matter
  • …if you’re looking for pre-existing medical travel insurance coverage because you worry your condition will flare up. You may have to search for a costlier health insurance that specializes in harder-to-insure patients (unfair, I know).

Bottom line, any comprehensive travel insurance has to meet your specific needs – and that’s the catch. You still have to read the small print just to make sure (and please, don’t neglect this essential step – boring but necessary).

Do click to get a quote or use the form below. It costs nothing and will give you an instant idea of price and conditions for your specific situation, even if you’re still shopping around.

Remember – there’s every chance you’ll be fine. I’ve been traveling for more than half a century and (touch wood) have had very few “incidents”. But when I had them, I was awfully glad not to be out on a limb by myself.

A few final tips before you purchase travel insurance

Once you’ve gathered the basic information, keep the following travel insurance tips in mind as you shop around:

  • Check the deductible. Even the best travel insurance deals won’t 100% of costs and you’ll have to fork out the first hundred or two.
  • Read the fine print. Your travelers’ travel insurance won’t cover you for war or terrorist acts, but each policy defines these differently. Think about this when you’re planning your trek across Afghanistan. Carefully read what your policy does NOT include.
  • Be honest. When applying for travel insurance with pre-existing medical conditions, don’t lie. Travel and medical insurance companies do check and if they find out you’ve lied, they might cancel your entire policy – just when you need it.
  • Your fault. Most providers of health insurance for overseas travel won’t cover you if what happened is your fault. If you got drunk and punched a wall, your broken fist will probably be yours to mend. If you tried to “fly” under the influence of drugs, ditto.
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