Topic: Finance · Insurance · Type: Evergreen · Reading time: ~7 min

Nearly two-thirds of travellers heading out on 2025 trips have no travel insurance in place. A different third bought policies they may not have needed. Both groups are probably making a financial mistake — just opposite ones.

Travel insurance is one of those purchases that almost everyone misunderstands. The common advice is binary: "always buy it" or "it's a waste of money." Neither is right. Whether it makes sense depends entirely on three things: where you're going, what you've already got, and what could actually go wrong.

What travel insurance actually covers (and what it doesn't)

A standard comprehensive travel insurance policy bundles several types of protection into one premium. The core components are trip cancellation and interruption coverage (reimbursing non-refundable costs if you can't travel), emergency medical coverage (hospital bills and treatment abroad), medical evacuation (getting you home or to a better-equipped facility), and baggage and delay protection.

The policies sold at checkout — the ones airlines and booking sites push at the last step — are often stripped-down versions of this, covering mainly trip cancellation. Medical coverage, the part that matters most financially, is frequently either absent or capped so low it's close to useless. Most credit-card travel protections, for instance, offer medical emergency coverage of just $2,500 to $5,000. A serious hospital admission almost anywhere in the world will exceed that figure in the first 48 hours.

Medical evacuation is where the real financial exposure sits. An air ambulance from Southeast Asia or Latin America back to your home country costs anywhere from $50,000 to $200,000 depending on your location and condition. The US State Department puts the upper figure at $200,000, and it warns explicitly that the US government will not cover these costs for American citizens. In the UK, NHS coverage stops at the border.

Worth knowing: A lost bag is inconvenient. A missed flight connection is annoying. A medical evacuation without coverage is a life-altering financial event. These are not equivalent risks, and they shouldn't be treated as one decision.

The three situations where you genuinely need it

You're travelling outside your home healthcare network. This is the clearest case. American travellers should know that Medicare and Medicaid provide essentially no coverage outside the US — a fact that 46% of travellers don't fully understand, according to a UnitedHealthcare survey. European travellers with an EHIC or GHIC card have better baseline protection within EU/EEA countries, but those cards don't cover private hospital treatment, repatriation, trip cancellation, or baggage — they cover emergency state healthcare only. The moment you leave the zone covered by your card, or need a private hospital, the gap opens up fast.

Your trip involves significant non-refundable spend. If you've prepaid a safari, a multi-leg itinerary, a cruise, or a resort package, you've created real financial exposure to cancellation. Travel insurance costs roughly 4–8% of the insured trip value. On a $5,000 trip, that's $200–$400. If a family illness or a medical event forces you to cancel before departure, you'd lose all of it without coverage. The maths here are straightforward: insurance makes sense when the potential loss significantly exceeds the premium.

You have pre-existing medical conditions, are older, or are travelling to remote destinations. Emergency claims are not random events spread evenly across the travel population. Older travellers, those with chronic conditions, and anyone going somewhere with limited medical infrastructure face materially higher risk of needing expensive emergency care. An air evacuation from a remote hiking region in Nepal costs more than most annual salaries. For these travellers, skipping coverage isn't frugal — it's a large unhedged financial bet.

The situations where you probably don't need it

This is where most travel insurance advice fails you. There are genuinely cases where buying a policy means paying for coverage you already have — or coverage that's wildly disproportionate to the actual risk.

Short domestic trips with refundable bookings. A three-night city break with a flexible-rate hotel and a refundable flight has almost no financial exposure that insurance needs to cover. Medical costs on a domestic trip are handled by your regular health insurance. Baggage loss is covered by the airline. There's no case for a travel insurance policy here.

When your credit card already covers the risk. Premium travel cards — particularly the Chase Sapphire Reserve, the Amex Platinum, or equivalent premium European travel cards — include meaningful trip cancellation, trip delay, and baggage protection as a cardholder benefit. If your entire trip was booked on one of these cards, you may already have solid cancellation and delay coverage. What most credit cards don't adequately cover is emergency medical — so if that's your primary concern, a separate travel medical policy (often just a few dollars a day) is a smarter buy than a full comprehensive plan.

European Union residents travelling within the EU. This is widely misunderstood. If you hold a valid EHIC and are an EU citizen travelling within the EU/EEA, you have access to the same state healthcare as local residents at no cost — including for chronic conditions and pre-existing illness. That's meaningfully better than most travel insurance medical components. You still won't be covered for trip cancellation, baggage, or private hospital care, so a basic policy or your card benefits can fill those specific gaps. But you don't need to pay for comprehensive medical coverage you already have.

The credit card coverage trap

One of the most common mistakes is assuming credit card travel protection is equivalent to a standalone policy. It isn't. Even the most generous premium card coverage has critical gaps. Most cards won't cover you if you didn't book the trip on that specific card. Coverage often doesn't extend to all travelling companions — it typically covers only the cardholder and certain immediate family members, not friends or colleagues. Pre-existing conditions are commonly excluded under a 60-day lookback window. And the medical coverage cap — even on a card like the Chase Sapphire Reserve — is $2,500 for medical treatment, against a standalone policy that might offer $250,000 to $500,000 for the same premium spend.

This is worth understanding because a third of travellers who have credit card travel benefits still bought separate insurance in 2024. Many of them were probably right to. The overlap isn't as complete as card marketing suggests.

If you're genuinely evaluating your credit card coverage, find the card's "Guide to Benefits" document (not the marketing page), and check: the medical coverage cap, whether evacuation is included, whether all your fellow travellers are covered, and what counts as a covered reason for cancellation.

A practical decision framework

Before buying, answer four questions:

1. Does my existing health insurance work at my destination? If no — and for most US and UK travellers going international, the answer is effectively no — you need at minimum a standalone travel medical policy. These cost roughly $1–5 per day for younger travellers, more for older ones.

2. Do I have significant non-refundable costs at risk? If yes and you have no other coverage, trip cancellation insurance makes financial sense. If your bookings are mostly refundable, it may not.

3. Does my credit card already cover the risk I'm worried about? Dig into the actual benefit document. If trip delay and cancellation are covered adequately and you're not worried about medical, you may be paying twice.

4. Am I in a higher-risk category? Age over 60, a pre-existing condition, adventure activities, remote destinations, or solo travel all shift the calculus toward buying.

For most international trips with any meaningful non-refundable spend, a comprehensive policy makes sense. For domestic trips with refundable bookings, it usually doesn't. For the large middle ground, it depends on what you already have.

You don't need to understand every line of your policy before buying, but you should at least know your medical coverage limit and whether pre-existing conditions are included.

What this means for your next trip

The default is not "always buy." The default is "know what you're actually exposed to, and check what you already have before buying anything new."

For most international trips: buy comprehensive travel insurance or at minimum a standalone medical policy. The premium is small relative to the downside. For domestic trips with flexible bookings: skip it. For everything in between: check your credit card's benefit document and your existing health insurance before reaching for a new policy.

If you're a frequent traveller, annual multi-trip policies often cost less than two or three single-trip policies and remove the decision entirely for trips under a certain duration. That's a reasonable middle ground for people who travel more than three or four times a year.

The real goal is making sure you're not one of the nearly one in five US travellers who have lost money by skipping coverage on a trip where it would have mattered — while also not paying premiums for protection you could have had for free.