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Travel Insurance – Is it Really Worth the Money?

Travel Insurance for Long Term Travel — A calculation of an expense/ risk ratio There is rally cry amongst 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 [...]

Travel Insurance for Long Term Travel — A calculation of an expense/ risk ratio

There is rally cry amongst 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.

But is it really?

Southern China

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.

Interview with a Tasmanian traveler who used her travel insurance

Travel Health — Travel Safe Tips

Filed under: Health, Travel Safe

About the Author:

Wade Shepard is the founder and editor of Vagabond Journey. He has been traveling the world since 1999, through 88 countries. He is the author of the book, Ghost Cities of China, and contributes to Forbes, The Diplomat, the South China Morning Post, and other publications. has written 3411 posts on Vagabond Journey. Contact the author.

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Wade Shepard is currently in: Rochester, New York

10 comments… add one

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  • Bob L February 24, 2010, 11:31 am

    Great advice. You shouldn’t be surprised that the insurance companies pay out so easily. Travel insurance is one of those things you don’t *have* to have and there is competition out there. They make their money by the fact that they seldom have to pay out. They probably get their best advertisement through the few people they do have to pay out to. Car/Motorcycle insurance companies are like this in states that do not require people to have insurance. Giving one customer a hassle can cost far more in bad press than the minor cost of just paying out.

    I like how you spell out to people to think this through themselves (as they should do for any decision) and weight the risks/advantages. You did not mention one of the most important things to do….read the contract in full. It can actually be hard with some companies to get a copy of the true contract before you pass over your money.

    For short term travelers (vacationers or multi month trips), not getting home in a reasonable time may be a big issue. For example, the organized rally I sometimes participate in requires riders to get MedJet or equivilent. This will get you a ride in a medical jet to a hospital near home if you require extended hospitalization and would prefer to be near home. They will do this from practically anywhere in the world. They offer a short term package and a year coverage. The short term is not much different in price from the long term but they are both relatively cheap (relative to the cost of most short term trips) I know of one rider that opted to save $50 to get the short term package. By the time he was stable enough to fly, his coverage expired so he is thousands of miles away from home and family in a hospital bed. One visit from his wife cost ten times what he saved by going for the short plan. I know of another rider that had the year long coverage and was able to get a ride to a hospital a few miles from his wife and home. If being near home is not an issue, and you don’t mind staying in a hospital in the jungles of Peru or whatever, then this kind of insurance would certainly not be a good thing. If you are taking big risks, and you feel it would be a bad thing to be stuck in this hospital then the insurance it a good thing.

    Oh, and if you decide to get insurance, shop around. You might be able to get a big discount for being a member of something or another. AAA or whatever. For example, even if you are not a motorcyclist, you can go through a site like http://www.horizonsunlimited.com/ and get a discount on some things. Might be cheaper ways than that too.

    As you say, the rules are very different for a short term trip, vacation or adventure type trip than for budget travel. And as you said, there are lots of different kinds of insurance depending on your needs. Thinking things through is a foreign concept for many, and a very good skill to have.

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    • Wade | Vagabond Journey.com February 25, 2010, 10:49 pm

      Hello Bob,

      Good point about how travel insurance pay outs is their best form of advertising. An emergency evacuation insurance may be a good way around buying full coverage that you will not really need.

      Thanks,

      Wade

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  • Caitlin February 24, 2010, 7:03 pm

    Yeah I have mixed feelings about this.

    I racked up a ton of hospital bills in December when I was super sick. When I get back to Canada later this week (see the blog for pretty big changes) I will try to file them and get the money back from my travel insurance company. That said, I think they will end up adding up to about 300-400 bucks, which is less than the 600 dollars I originally paid for these 8 months away. So is it worth it?

    I’m still uneasy about the idea of traveling without any insurance. I always considered myself quite invincible, but that quickly changed when I became really ill in December. I ended up being ok, but if there had been more complications, etc, I could have been out thousands of dollars (private hospitals in Guatemala, which is where I would want to go for surgery or something, are actually pretty expensive. The public hospital I went to orginally was fine for basic stuff, but it seemed really dirty, even to someone pretty gross like myself.)

    For some countries, I think it’s idiotic not to have insurance. I mean, if I went to the United States and broke my leg, I don’t even want to begin to think how much that would cost in a hospital! When I was down in DC last year, I bought insurance for the week, I think it ended up being like 30 bucks. Totally worth it.

    Anyways, I am giving no real answer. Typical me.

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    • Wade | Vagabond Journey.com February 25, 2010, 10:47 pm

      Hello Caitlin,

      It seems as if there is no real answer when dealing with the question of travel insurance. Some people feel they need it and others don’t. It is my impression that the peace of mind that it gives to some travelers is that which makes it most valuable.

      It is a good point that the decision to buy travel insurance should take into consideration the medical cost of the region of travel. It is a whole lot easier to wrap up a large medical bill in some countries than in others.

      Thanks for the comment.

      Walk Slow,

      Wade

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  • Andy Graham HoboTraveler.com February 26, 2010, 8:54 am

    I want Health Insurance:
    I want insurance that will pay for any major expense over 5000 USD.

    I can get medical attention cheap outside the USA, but cannot pay the long-term problem expenses.

    Note the small print often says, they will not pay in countries where the USA says not to go, I go to these countries and avoid the ones they say are ok.

    I think having a baby has to make this acutely needed Wade, but there is a risk to walking down the street.

    I think this may be good.
    http://www.bupa.co.uk/

    Earning a million dollars would help, then we can be self insured. I feel a sense of destiny, I am not too worried.

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  • Super Travel Insurance June 29, 2010, 4:15 am

    Good point about how travel insurance pay outs is their best form of advertising. An emergency evacuation insurance may be a good way around buying full coverage that you will not really need.

    Thanks,
    Super Travel Insurance

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  • Chris from World Nomads January 21, 2011, 12:20 pm

    My name is Chris Noble, I’m the General Manager of WorldNomads.com. We’re a global travel insurance business specifically focussed on independent and adventurous travellers. We also provide travel safety advice amongst a range of other services.

    But enough about us, is travel insurance really worth it?

    I’m going to address some of the points made in the post by Wade and comments above and give my two cents worth.

    “The benefits of travel insurance greatly diminish proportionate to how long you travel. Barring catastrophe”

    Barring Catastrophe. Catastrophe is usually defined by the insurance industry as a large event like a natural disaster, but try telling the person in hospital with a spinal injury that they aren’t suffering a catastrophe.

    The singular most important reason to take out travel insurance is to cover you in the event of something medically happening to you or your family.

    That is at the heart of the reason why travel insurance exists. Everything else in my opinion is a ‘nice to have’.

    One of the number one causes of medical repatriation cases for our World Nomads is road traffic accidents. In most cases, not because of the fault of the traveller.

    No amount of precaution can be taken to prevent a 5 tonne cement truck ploughing into you in Bolivia (that case was in excess of $180,000 dollars in medical costs).

    Given that most adventure travellers will be riding in the back of cattle trucks, on dodgy Peruvian buses, Indian trains, motorcycles (anywhere), and all manner of charabangs, a traffic accident is a very real possibility.

    Then there’s disease:

    There are no vaccines against Dengue Fever, which is sharply on the rise. There are five strains, and getting one makes it more likely you’ll get the potentially deadly Dengue Hemorrhagic Fever from the other strains. The $20,000 required to cover the cost of moving one of our World Nomads from Laos to Bangkok to receive specialist treatment, surely, was worth the cost of the policy.

    BobL – “They probably get their best advertisement through the few people they do have to pay out to.”

    Yes, we do. Most travel insurers only make a few cents from every dollar they receive in premium, so although when compared to all cases, the plus $50,000 cases might be small, the total amount of claims payed out is massive.

    The ‘benefits’ of travel insurance are the same whether you’re on day 1 of your journey or day 1,038. The likelihood of something occurring does increase over time as you’ve pointed out in the post.

    “Medical care is cheap in most of the world. It takes a lot of medical care abroad to add up to even a $100 insurance excess fee”

    It all depends on what country you are travelling in and what level of medical care you require. The cost of treatment for the common cold can be minimal if you’re picking up antibiotics in a clinic in Quito, but that exact same treatment in Tokyo, Singapore, San Francisco is not. By the time they’ve requested you get a chest x-ray, blood tests etc you’re staring down the barrel of hundreds, even thousands of dollars. Of course, you could refuse when you think you’ve got a case of the Bali belly, but are you qualified to tell the difference between the symptoms of diarrhoea and Hepatitis A?

    “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.”

    Yes, you would have paid this amount and on day 364 of year 9 when you were treated and repatriated due to Malaria symptoms travelling from Philippines to Mongolia, could not be treated for this in Mongolia and could not be moved to China as authorities would not provide clearance due to H1N1 flu risk and Bangkok was the closest option for evacuation. Then the Air Ambulance cost of £60,000 plus medical treatment, additional accommodation and flight to UK (true story) might have changed your mind as to the value of having bought that policy.

    “The medical side of travel insurance generally only covers genuine emergencies where life and limb are at stake.”

    Can’t agree with you on this one. Let’s look at some of the benefits offered around travel insurance in regards to medical coverage. All policies are different, but many include the following
    Hospitalisation
    Outpatient treatment by a doctor/specialist
    Prescribed medicines
    Prescribed treatment by a physiotherapist/chiropractor
    Provisional pain-stilling dental treatment

    Remember, any good travel insurance policy will come with the support of a medical assistance company. If you feel any concern about your health or personal safety, you can call them and they’ll assist you in finding the nearest medical facility. It doesn’t matter if it’s a swollen toe that you stubbed the night before, the nagging cough that’s been hanging around for weeks or that pain you felt when you stepped on something in the surf, which turned out to be a poisonous fish, triggering post traumatic compartment syndrome and requiring $10,000 in medical treatment. (It happens!)

    “Travel is about self sufficiency, about relying on yourself to get out of bad circumstances, about taking care of yourself.”

    I think it’s about being informed of the risks you might face when you’re on the road. Do your research, understand what is most likely to happen to you in the places you travel. I have the constitution of a wet paper bag, so when I travel to Cambodia in February, I’ll pack a gastro kit. I agree with you that you’re responsible for your own safety in most cases, but when the proverbial shit hits the fan, you may well need more than support than you’re qualified to be able to give yourself. Not sure about you, but I’m not going to remove my own tooth with nothing but an ice skate, a volleyball and some string I’ve made from bamboo!

    “Each traveler needs to assess their need of travel insurance for themselves”

    Completely agree, every traveller is different, every journey is different. Make an informed decision on what level of cover you require based on where you’re travelling, what activities you’re undertaking and how much you care about your possession or the chances that your plans may need to change and you could be left out of pocket.

    “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.”

    You don’t “need travel insurance to travel”, unless it’s deemed compulsory by the adventure travel company who does not want to be responsible for the cost of your treatment should something happen to you on their trip, or as a visa requirement for entry into a country. Just about every government website promotes the need to take out travel insurance and they’re not making any profit from this.

    “Do not let the “odd man out” stories of the traveler who did not purchase travel insurance and needed it scare you.”

    You’re totally free to roam the world without travel insurance in most cases, you might not be scared by the stories of people being stuck in a country with a broken back whose government wont repatriate them and their family is left to raise the $80,000 to get them airlifted home.

    It is ultimately your decision on whether you wish to run the risk of being caught in a potentially, horrendously, expensive situation. For a lot of people, just knowing that if their gear is stolen they’ll get something back, or if their flights are cancelled, they wont be out of pocket by $800.

    Just make sure that you do take the time to read the policy wording. Travellers will spend months researching their trip, but not give an hour to go through the policy wording and contact the insurer if there’s something they don’t understand.

    Most insurers give a 14 day cooling off period should you wish to cancel. Use it ! Call them up/ email them and get them to explain if you’re unsure about a particular benefit or exclusion, best to ask beforehand as opposed to finding out when the claim is denied.

    I’ve heard “ The best insurance company is the one you never need”. That’s a rubbish statement !

    The best travel insurance company is a travel companion, there to provide not only cover, but support you whenever you need it on the road. Be it information on the destination you’re travelling to, connecting you to other travellers so you can understand the local environment better. Services that help you get the most from your travel experience and tools to keep you travelling safely as well as staff who understand what you need because like you, they are travellers too.

    Wade, I hope you never have a situation where you need to be medically repatriated but if you do………I hope you’re covered.

    Chris Noble
    General Manager
    WorldNomads.com
    @worldnomads

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    Travel Insurance – Is it Really Worth the Money?

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    • Wade | Vagabond Journey.com January 21, 2011, 12:37 pm

      Insurance is always a matter of probability and possibility.

      It is possible for a meteor to fall from space and hit me in the head, but am I going to take out meteor insurance?

      These scary stories that you outline above are the best advertising that insurance companies can have. I suppose the game is to make me fear the future. Sure, travel health insurance may be good for people who fell uncomfortable without it — I do not mean to say that it is a bad idea.

      I cannot argue against nor vouch for the stories that you outline above. There is a risk to traveling, there is a risk to living.

      As Thorough said, “A man sits as many risks as he runs, for as long as a man is alive, there is a chance that he may die.”

      About dengue, malaria, and Hep A. Every traveler will get all three of these diseases eventually. I have had some of them. They are bad, but not as bad as they are made out to be if caught in time. Andy Hobotraveler.com just had malaria in Togo, and this is the typical story of what happens when a traveler gets infected:

      Andy Hobotraveler.com Malaria story

      For the squeamish who maintain their enthnocentric tilt on medical facilities abroad, perhaps they need the insurance to cover the over inflated costs of foreign VIP clinics. But, from experience, I can tell you that the doctors who operate these clinics are the same ones working in the hospitals, where you can go an get the same treatment for a fraction of the cost.

      That said, I do agree that evacuation and repatriation insurance may be a good idea for some people. But what good is repatriation when I have no insurance in the USA — one of the most expensive country for medical care in the world.

      Also, if you want to spend all your time in the most expensive regions of the world that do not offer affordable health care — Japan — perhaps your World Nomad insurance is a good idea, as it is generally priced pretty well.

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  • Rob November 2, 2011, 3:32 am

    chances of getting ill far outweigh the chances of a meteor falling on your head Wade. Indeed the longer you travel the more inevitable it will be. My friend had to have his appendix out in India.He was insured. I, however do travel without travel insurance. It ran out the day before our bus crashed into a bus in rajahstan! murphys law!

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    • Wade Shepard November 2, 2011, 11:15 am

      Hello Rob,

      The matter is not just getting ill — this is normal — but of receiving a medical bill that is extremely high. Such bills are rare outside of a few fringe first world countries. It is more the rule of the planet that people can afford to go to the doctor — the USA is extremely odd in that regard, and as long as I stay out of that country it is my impression that I can pay for 99% of the medical assistance that I may need.

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