Is Travel Insurance Worth It? What Your Credit Card Won't Cover, and What a Real Policy Costs

Two clients, one week, $50,000

Erin talks with a lot of our clients about travel insurance, and last week made her point for her. Here’s how she put it:

“In just the past week, I’ve had two clients encounter medical issues just days prior to their expedition cruises, requiring them to cancel their trips. Those bookings together (including flights) represent just over $50,000 USD in non-refundable payments that are 100% covered by a modest insurance policy.”

— Erin Lockwood

That’s most of what you need to know about travel insurance. Nobody plans to get sick four days before a once-in-a-lifetime trip, and by that point almost nothing is refundable. The cruise line has filled the ship around you, the flights are cheap fares, and the hotel’s cancellation window closed weeks ago. Without a policy, both of those clients would have lost the trip and the money. With one, they lost the trip but not the money, and they can rebook when they’re well.

The rest of this article covers the details: what insurance actually pays for, what your credit card and your cruise fare already include (less than most people assume), the types of policies, and what they cost. If you’re headed to Antarctica in particular, the requirements are stricter, and we’ve written a separate guide to Antarctica travel insurance.

It doesn’t guarantee the trip. It limits the regret.

Consumer advocate Christopher Elliott asked me about this for his recent column in USA Today (also on Elliott.org). His piece covers the whole range of products now sold to nervous travelers: insurance, hurricane guarantees, Northern Lights guarantees, even rain guarantees. What I told him is that our clients aren’t trying to guarantee a perfect trip. “They’re trying to limit regret.”

That’s the right way to think about it, because insurance doesn’t promise the trip goes well. It pays out when one of the reasons listed in the policy happens to you. Elliott’s column opens with a traveler who paid $805 for a policy before a long Southeast Asia tour. The operator then cut the itinerary from 40 days to 10, and she was left holding a $4,500 nonrefundable flight. Her policy didn’t cover it, because “the tour company changed its plans” wasn’t one of the listed reasons.

Read the full column at USA Today. The lesson we took from it: the policy itself is only half the job. The other half is knowing what it covers before you need it, and that’s where an advisor earns their keep.

The moments you’ll wish you’d bought it

These are the situations we actually see, roughly in order of how often:

• You or a family member gets sick or hurt before you leave. This is the most common claim by far, and it’s what happened to both of Erin’s clients. Trip cancellation coverage reimburses your nonrefundable payments when a covered illness, injury or death (yours, a traveling companion’s, or a close family member’s at home) forces you to cancel.
• Something goes wrong at home while you’re away. A parent is hospitalized and you need to fly home from the middle of a cruise. Trip interruption pays for the part of the trip you didn’t use, plus the last-minute flight home, which is rarely cheap.
• You need a doctor abroad. A fall on a cobblestone street, appendicitis, a bad reaction to something you ate. Most U.S. health plans pay little or nothing outside the country, and Original Medicare generally doesn’t cover care abroad at all. Hospitals overseas often want payment before they treat you.
• You need to be moved somewhere with better care. A medical evacuation from a remote island, a ship at sea, or a safari camp to a proper hospital, or a medical flight home, can easily cost tens of thousands of dollars, and much more from somewhere truly remote.
• Your flight is late and the ship leaves without you. Cruise ships don’t wait for delayed flights. Missed-connection and trip-delay coverage pays to get you to the next port, plus meals and a hotel while you wait.
• Your bags don’t arrive. That’s annoying on a city break and a real problem on an expedition, where you need the parka and the waterproof pants on day two. Baggage-delay coverage pays for replacements.
• A hurricane hits your destination. This is covered as long as you bought the policy before the storm was named. (More on that below.)
• A travel company goes out of business. Some policies cover a supplier’s financial default, with conditions on when you bought the policy and which companies qualify.

What your credit card actually covers (less than you think)

Many of our clients carry premium travel cards, and many assume the card covers the whole trip. It helps, and it’s worth knowing what it includes, but it’s rarely enough on its own for a big trip.

The limits are low. The Chase Sapphire Reserve has some of the strongest travel protections of any card. Its trip cancellation and interruption benefit is capped at $10,000 per person and $20,000 per trip. Emergency medical tops out at $2,500, and emergency evacuation at $100,000. The Amex Platinum caps cancellation at $10,000 per trip and $20,000 per 12 months, and it doesn’t pay medical bills abroad at all; its assistance line can arrange care, but you pay for it. Most cards without an annual fee don’t include trip cancellation at all. Compare those limits to two people on a luxury cruise with flights, and the gap is obvious. (Benefits change, so check your card’s current Guide to Benefits before you count on any of these numbers.)

You’re only covered for what you charged to the card. If you paid the deposit on one card, the balance on another, and the flights with miles, you have three different levels of coverage and possibly some none at all.

“Covered traveler” may not include everyone on the trip. Cards define who’s covered, and it’s usually the cardholder plus some immediate family. A friend traveling with you, an adult child who paid their own way, or a parent who paid for their own cabin may not be covered.

Card medical coverage is usually secondary. That means it pays only after your own health insurance does, which leaves you sorting out the claim with two companies.

Your card’s trip delay, baggage and rental car protections are genuinely useful, and they work well alongside a real policy. Just don’t rely on the card alone. If you’re deciding which card to carry, we compared the premium travel cards we actually use.

The coverage built into your fare is a head start, not a policy

A growing number of cruise lines and hotels include some protection in the price or promise you something if things go wrong. These are real benefits. They just don’t do what a policy does.

Included protection plans are usually narrow. Atlas Ocean Voyages is a good example. Every fare includes a plan whose headline benefit is $250,000 in emergency medical evacuation, which is generous. As of this writing, the plan certificate also includes up to $2,000 for trip delays and $100 for baggage, and nothing else: it doesn’t pay doctors or hospitals, and it doesn’t reimburse you if you have to cancel. Atlas itself recommends buying more coverage, and we agree.

The cruise line’s own plan at checkout may refund you in credit, not cash. Many lines sell their own protection plans, and some pay certain cancellations as a future cruise credit rather than a refund. That’s fine if you plan to rebook with the same line. It’s no help if you were going to spend that money on a different trip or need it back.

Hotel and weather guarantees cover one specific event. Elliott’s column lists several: Caribbean resorts that refund or rebook if a hurricane watch or warning is issued shortly before you arrive, Norwegian coastal lines that give you a free cruise if you don’t see the Northern Lights, and companies that pay out if it rains too much. These are fine as extras, but read the terms. The resort guarantee he describes applies only to bookings made directly with the resort and doesn’t cover your airfare. None of them pay for a doctor.

The types of insurance, in plain English

Type	What it pays for	Good for	Watch for
Comprehensive	Cancellation, interruption, medical care, evacuation, delays, baggage	Most trips with large nonrefundable costs	Covers only the listed reasons; read them
Medical only	Doctors, hospitals and usually evacuation, but no cancellation	Refundable or inexpensive trips; travelers whose card or fare already covers cancellation	Won’t reimburse a canceled trip
Evacuation membership	Transport to a hospital or home	Remote travel, on top of a medical policy	Usually pays for the flight, not the hospital bill
Cancel For Any Reason (upgrade)	Part of your cost back if you cancel for any reason at all	Uncertain plans, worries a standard policy won’t cover	Typically repays 50% to 75%; must buy early and cancel at least a couple of days before departure
Annual (multi-trip)	Medical and evacuation on every trip for a year, with some cancellation	Three or more trips a year	Per-trip cancellation limits are often well below the cost of a big trip
Flight-disruption (parametric)	A set amount automatically when a defined delay or bag problem occurs	Frequent flyers who hate paperwork	Covers only flights and bags

A few notes on the ones people ask about most:

Cancel For Any Reason is exactly what it sounds like, with conditions. You usually have to buy it within two to three weeks of your first trip payment and insure the full nonrefundable cost. You get back only part of what you paid, and the policy has to be in place well before you cancel. As Elliott points out, some plans also leave taxes and certain fees out of the payout. It also adds noticeably to the premium. It’s worth it for some people and unnecessary for others, so it’s a good one to talk through with us.

Annual versus single-trip. If you travel three or more times a year, an annual plan often costs less than buying separate policies, and you never have to remember to buy one. The catch is cancellation: annual plans usually cap it per trip, often far below what a luxury cruise or safari costs. For a household that travels often and takes one or two big trips a year, a common setup is an annual plan for medical and evacuation, plus a separate cancellation policy for the big trip. We can tell you whether that adds up for your year.

Cheaper than you’d guess

This is the part that usually changes people’s minds. A comprehensive policy typically costs somewhere around 4% to 10% of the trip cost you insure, and the biggest factor in where you land is the travelers’ ages. Medical-only coverage costs a fraction of that, because it isn’t insuring the price of the trip.

So on a $20,000 trip, you’d expect a comprehensive policy to run somewhere between about $800 and $2,000. That’s the price of a couple of nights in the hotel, set against the chance of losing all $20,000 (plus the cost of a hospital stay abroad). For Erin’s two clients, a policy of that kind of size stood between them and losing $50,000.

There are trips where we’d say skip it, or just buy medical coverage: when nearly everything is refundable, when you could absorb the loss without much pain, and when your health insurance already covers you abroad. But for a big, nonrefundable trip, especially anywhere far from good medical care, it’s an easy decision.

How to buy it so it actually pays out

Buy it the week you pay the deposit. Most comprehensive plans include a pre-existing condition waiver only if you buy within a short window after your first trip payment, often 14 to 21 days, and Cancel For Any Reason has the same deadline. Buy late and a heart condition or a bad knee you’ve had for years may not be covered, which is exactly the kind of thing that cancels trips.

Insure what you’d actually lose. The premium is based on the trip cost you insure. Refundable hotels and flights you’d happily take as a credit can usually be left out. Just make sure you meet any requirement to insure the full nonrefundable cost if you want the waiver or Cancel For Any Reason.

Name everyone, and know whose illness counts. Cancellation coverage usually extends to the illness of a close family member who isn’t traveling. Check the definition if the person you’re worried about is a grandparent, an in-law or a business partner.

Buy before the storm has a name. Once a hurricane or tropical storm is named, a new policy won’t cover cancellations caused by it. Atlantic hurricane season runs through November 30.

Call the assistance line before you get treatment if you can. Many policies want their emergency team involved in arranging care, and evacuations almost always have to be approved by them first.

Keep everything. Itemized receipts, doctor’s notes and the supplier’s cancellation confirmation. Claims are paid on paperwork.

Why we sell it, and what we do when you file a claim

Full disclosure: we earn a commission when clients buy insurance through us. The policy doesn’t cost you more because of it, since insurance rates in the U.S. are filed with and regulated by the states. We’d still rather you read this and buy the right policy somewhere else than buy the wrong one from anyone.

We use Travel Insured for most of our clients because the plans are flexible, readable and quick to activate. What matters more to us is that when something goes wrong, you’re not on your own: we can help you gather the paperwork from the cruise line, hotel and airline and work through the claim with you.

Get a quote before you need it

Tell us who’s traveling, when you made your first payment and where you’re going, and we’ll price coverage that fits the trip, usually within a few hours. Get a travel insurance quote here. If you already have a policy or a card and want Erin to check it for gaps, just ask. And if you’re still choosing the trip, request a trip quote and we’ll build the insurance into the plan from day one.