The Pros and Cons of Travel Insurance

A miniature plane on top of a small plastic globe
Frank Vex

How many times have you gone to purchase a flight or hotel room, only to hover your mouse uncertainty over the “Do You Want to Purchase Travel Protection?” prompt at the end? Travel insurance is easy to find and purchase, but is it worth the investment?

There’s no clear-cut answer. Travel insurance makes sense in some situations, but it’s unnecessary in others. Let’s examine exactly how this insurance works and identify the pros and cons so that you can make a more informed decision next time.

How Does Travel Insurance Work?

Travel insurance is designed to protect you from the financial risks and losses most likely to occur while traveling. Though a travel policy can’t cover every single situation, it’s meant to help you handle unforeseeable events.

Most policies reimburse you for any out-of-pocket expenses you incur as a result of the type of emergency covered by your plan. Say you purchased trip cancellation benefits for your cruise to the Bahamas. A week before your vacation begins, you become ill with bacterial pneumonia and your doctor advises you to cancel. Without travel insurance, you’d lose your entire prepaid, nonrefundable trip costs. With travel insurance that covers serious, disabling illnesses, you can file a claim to request reimbursement for the unexpected cancellation.

The Pros

It Gives You a Sense of Security

Traveling is simultaneously exciting and unpredictable, especially if you’re in a foreign country. Insurance offers a sense of security to help you enjoy your trip and trust that unexpected issues won’t create immense financial hardship for your family.

It Might Save You Money

Travel insurance is a gamble; it could save you money and prevent a financial disaster, or it could simply remain another cost tacked onto your already expensive vacation. For example, if your total trip cost $3,000 and you paid $150 for travel insurance without ever filing a claim, you’d never get that $150 back. On the other hand, if you only spent $150 on your insurance premium but received a $1,500 reimbursement due to flight cancellation, you’d consider the premium money well-spent.

The Cons

It’s an Additional Cost

True, travel insurance is yet another cost to consider when budgeting your trip. You might already have travel protection through the credit card or travel agency you used to book the trip. (For example, the Chase Saphire Preferred Card has a generous reimbursement policy.) Make sure you read the fine print to identify your existing coverages since they rarely cover everything. You may decide that travel insurance is worth the extra cost—or not.

Restrictive Terms

Unfortunately, there is no guarantee that your travel insurance policy claim will be approved. Even if you think your situation qualifies under the conditions of your policy, the travel insurance company might find a loophole to reject your claim. If this happens, you won’t just be out the money you spent on your policy; you’ll also be facing the financial ramifications of your travel issues without reimbursement.

Most denied claims occur when policyholders don’t realize the exclusions and restrictions that apply. You don’t want to find yourself in this situation, so make sure you select an insurance plan that is flexible and comprehensive enough to offer legitimate protection worthy of your investment.

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