A calculation of an expense/ risk ratio.
Travel Insurance for Long Term Travel — A calculation of an expense/ risk ratio
There is rally cry among the Lonely Planet class of travel websites and literature that travel insurance is an absolute necessity for any trip abroad. I am now hearing this cry being reverberated in the hostel halls and bars of the backpacker circuit.
I don’t remember hearing this much talk over travel insurance before. I don’t remember anybody talking about travel insurance 10 years ago, but now it is something that is supposedly inseparable from traveling itself. Now there are tons of review sites (ConsumersAdvocate.org being one of the newest) and it seems to be a smart move to make for anyone traveling.
But is it really?
For the past year or two I have been asking many travelers who have carried insurance if it was worth the expense: if the insurance companies really pay out, if they will buy insurance again for their next trip. Many of them — whole heatedly — proclaim proudly that it is worth every penny, and many cited circumstances where their underwriters bailed them out of a jam . . . just as they promised they would.
I am always surprised to hear these stories, as I would assume that an insurance company would find some reason — any reason — to not pay. Though many of the stories that I have heard of travelers receiving insurance payouts, the process is often without headache. I have heard this on so many occasions that I cannot doubt its authenticity: many popular backpacker insurance companies, apparently, really pay out without much of a fight.
For short term travel — where you plan on spending lots of money anyway — perhaps travel insurance is not the waste that I once took it to be. If you are going on a short trip and are deeply invested to it in both time and money, have expensive luggage and a tight schedule, then travel insurance may be a good idea for you. What is an additional $50 against a year of saving for a two week, multi-thousand dollar adventure anyway?
Though if you are traveling long term around the planet for years on end on scant resources, then it is my impression that the benefits of travel insurance greatly diminish proportionate to how long you travel. Barring catastrophe, if you travel long term, the amount of your total claimable losses should not come near the cost of your insurance premium. It is true that the longer you travel the higher the likeliness that you will be able to file an insurance claim, but it is my impression that the amount of money reimbursed may not be drastically over what you pay for it.
I have never met a long term traveler with travel insurance, the very ideal of which is often a laughable proposition.
Is travel insurance really worth the cost?
Medical care is cheap in most of the world. I stayed two nights in one of the best hospitals in India and only found myself with a $100 bill on the way out. Needless to say, I paid cash. Needless to say, this amount would not have even been over the deductible for most travel insurance plans. In Turkey, my pregnant wife needed a prenatal visit, and only $30 was the damage for a collection of tests, an ultrasound, and a full inspection from multiple doctors. I have been in and out of hospitals in China over the years with various little problems, and, again, the amount of money that I paid would nowhere near add up to an insurance policy’s deductible.
It takes a lot of medical care abroad to add up to even a $100 insurance excess fee. In ten years of traveling through 45 countries there was not one time that I would have been able to make an insurance claim. If the going rate of insurance coverage is $600 a year for a single traveler from the USA, then this would have been $6000 paid out for nothing.
If I were to be robbed of absolutely everything tomorrow — an always prevalent possibility — then I would be out around $1500. This is around the amount of money that I would need to replace everything. If I were to make an insurance claim for this amount of money, and if it is really paid in full, then I would have received $1500 for paying $6000. It doesn’t add up.
The longer you travel the less of a value travel insurance will be.
What about a “What if” event?
The medical side of travel insurance generally only covers genuine emergencies where life and limb are at stake. Travel insurance cannot be used for a checkup or a chronic pain in your leg. The medical side of travel insurance is only for the “What if” event.
These situations can strike at any time.
Though I would much rather invest time and effort into preventing these events than paying out for a contingency plan. So I take care of myself, I tell taxi drivers to slow down when they are going too fast, I don’t ride with a visibly drunk bus driver, I use care when crossing the street, I go home at night and go out in the morning, if I have a medical problem I go to a cheap local hospital rather than an expensive “foreigner clinic,” I try to make sure all of the food I eat is prepared properly.
I try to do all that I can to prevent a “what if” situation, but if one did occur, I would deal with it. Having to spend all of my money to ensure the health of my family in an emergency is not the worse thing that can happen — I can make money again — but investing thousands of dollars over a span of many years into something that there is only a chance that I will be able to cash in does not match my senses of economics.
I am not particularly against travel insurance: I have heard of numerous accounts where a traveler was really bailed out by their underwriters, and I know that many tourists swear by it. But it is my impression that it is just a hole in the ground to toss your money for long term travelers.
Travel is about self sufficiency, about relying on yourself to get out of bad circumstances, about taking care of yourself. Part of the great affair of traveling is knowing that you do not have a contingency plan beyond your own wit and intuition. To attempt to travel in a sealed box of perceived security is to side step one of the most important benefits that comes from traveling.
I suppose if you feel there is a chance that you may end up half dead in a Paris Hospital, travel insurance may be a good idea. Though I feel strongly that it is not for all travelers everywhere.
Travel is about nothing if not confronting fear and relying on yourself to get through any twist or blockade in the road.
Each traveler needs to assess their need of travel insurance for themselves
Look at your gear: Is it really worth anything? Would it cost an exceptional amount of money to replace?
Look at your travel plans: Would it really matter that much if you missed a flight and had to book another? Would it wipe out your pocketbook to have to purchase your own flight home in the event of an adverse situation? Are you planning on jumping off of mountains?
Look at your health, disposition, history: Can you take care of yourself? How often do you go to the doctor?
Look at your duration of travel: How long will you be traveling for? One week? One year? A decade?
Evaluate your responses and determine for yourself if travel insurance is worth the expense.
Do not listen to the guidebook and major website recommendations for travel insurance, as they make money by convincing you that you need it to travel. Beware of other biased sources of information, such as travel bloggers who have affiliate links to insurance companies on their pages.
Evaluate your own need for insurance on your own parameters. Most of the time, insurance is not needed — this is how the companies make their money. Don’t just buy travel insurance because everybody else does or because there is a huge ad for it in your guidebook. Do not let the “odd man out” stories of the traveler who did not purchase travel insurance and needed it scare you. I repeat, most people who buy travel insurance do not use it.
If you are traveling long term, know how to look out for yourself, look both ways before crossing the street, are not out each night in bars, are not planning to climb K2, and have little fear of local medical care, then the benefit of travel insurance will probably be diluted by the expense.