Shopping for annual travel insurance can be confusing for long-term travelers or those who take many frequent trips overseas. Whether you are looking for multi-trip insurance for a long journey around the world, gap year travel insurance for that year backpacking Europe, the best backpacker travel insurance, or just long-term travel insurance for your nomadic global lifestyle, there are likely to be plenty of annual travel insurance plans that will cover you for a pretty penny.
But before you can start looking for annual travel insurance, have you stopped to consider whether you really need overseas travel insurance in the first place?
As a frequent traveler who tries to keep costs to the minimum, I’ve frequently wrestled with the decision of whether or not to buy travel insurance for myself. When I made short trips abroad, sometimes I did and sometimes I didn’t. But then this question became especially important in 2016, when I set out to travel the world for an entire year.
“Should I buy an annual worldwide travel insurance policy for my gap year?” I thought to myself.
I needed to keep costs to a minimum, but I already planned to visit multiple countries around the world (I ended up visiting 42 by the time it was over!). And I didn’t want to risk catastrophe. I studied the issue closely, researching it and doing the math on whether it made financial sense. I ultimately chose to buy overseas travel insurance for one single reason (read on to find out what it is). But, the truth is that buying travel insurance isn’t going to be the right decision for everyone – and you may not need it depending on your circumstances.
That’s advice that you probably won’t hear frequently from other pages on the internet. Why? Well, much of the advice on buying travel insurance is written either insurance companies themselves or by bloggers who will receive a commission for selling travel insurance.
And you know what? In full disclosure, so will I! If you choose to buy travel insurance through the links on this site, I’ll receive a small commission (at no extra cost to you) that helps me keep this site running. So obviously I, like a lot of other writers out there, have an incentive for you to buy insurance.
But the truth is that I REALLY don’t like wasting my money, and I absolutely don’t want you to waste yours. So I’m going to tell you something that isn’t in my best interest: buying an annual travel insurance policy simply might not be best for you depending on your situation. I’ll explain why in more detail below.
And you know what else? If buying coverage ultimately does make sense for you, I only recommend one company: World Nomads, because it’s the company I personally use to insurance my travel around the world (and I recently re-upped with them when I bought travel insurance for Mexico). They are the only company I can honestly recommend at this point.
Before you can decide whether or not annual travel insurance makes sense in your situation, it’s helpful to first briefly understand the sort of coverages that you might want to buy. While it depends on the specific annual travel insurance policy you choose, generally speaking, most companies will offer you the chance to purchase coverage for the following:
While it is possible to purchase insurance for other things, the above is a list of the most common coverages available in most annual travel insurance policies. Be sure to read any exclusions carefully, especially if you have a pre-existing condition, if you’re going to an unusual destination (e.g., Somalia), or if you are planning to engage in any dangerous or unusual activities (e.g., adventure sports, scuba diving, etc.).
Before you decide if an annual travel insurance policy is right for your situation, it helps to briefly understand what travel insurance is and why you might want to buy overseas travel insurance.
First, as a general financial principle, insurance is something that you should only buy to cover risks that you can’t self-insure.
What does that mean? Well, think of it this way: if the bad thing that is covered by the insurance comes to pass, can you afford to pay for it without seriously damaging your financial health?
If the answer is yes, then the insurance probably isn’t a good deal for you.
For example, think about an extended warranty plan on a new toaster. That’s essentially just insurance in case something bad happens — e.g., the toaster breaks after its original warranty.
But you know what? If a toaster breaks, you can probably afford to buy a new one!
And, though if that actually happens, you’ll be marginally financially worse-off than if you had bought the insurance, you probably won’t actually need the coverage and you’ll have spent that money for nothing. Over the long run of your life, you’re likely to save money by taking a pass on all the extended toaster warranties out there (not to mention other appliances, cell phones, cars, etc) and just self-insuring against accidents.
So what does that mean for travel insurance?
Well, think about the coverages we just discussed above. A lot of those things are stuff you can probably self-insure! If your baggage gets delayed on your flight to Berlin, you can probably afford to buy an extra pair of clothes and some toiletries to hold you over until it arrives, right?
And if someone steals your GoPro in Egypt, is it really going to break the bank to have to buy a new one?
And if you have to change your flight because of a hurricane, can you just eat the cost (which may well be covered by the airline anyway)?
In short, a LOT of the things that travel insurance companies try to sell you are on simply not the sort of services that make good candidates for insurance coverage. Just like it doesn’t make sense to spend your life buying extended toaster warranties, a long-term traveler will probably save money over the long-haul by self-insuring for de minimus risks like baggage delays, and trip interruption.
That’s why I don’t put too much stock in these sort of coverages when I shop for travel insurance.
Setting aside the fact that many annual travel insurance companies try to sell you on relatively small and unimportant benefits, there are a few other reasons that you might not need overseas or multi-trip travel insurance, depending on your circumstances:
How? Well here are some ways you may already have full or partial overseas travel insurance:
As always, it’s best to check with your insurance company in each of these situations, but the point is that for many people annual travel insurance is partially or even wholly redundant to coverages you already have.
Depending on your circumstances, you may not see much benefit from travel insurance even if you have to file a claim.
For example, many travel insurance plans exclude pre-existing medical conditions. If you’re in the unfortunate situation of needing medical care for that condition, you’re probably not going to get any benefit out of the travel insurance.
Travel insurance also is generally only secondary to other coverages. So if an airline loses your bags or your flight is canceled, your travel insurance company is probably going to require you to first ask your airline for assistance.
You also need to consider deductibles. If you have a $150 emergency medical bill to treat a stomach bug in India, but your annual travel insurance policy has a $1,000 deductible, you’re not going to get much benefit out of the policy.
In short, travel insurance isn’t a cure-all for everything that may come up traveling. Considering that annual travel insurance can easily run over $1,000 USD — and that most people will never actually make a claim under it — it’s worth really thinking hard about whether or not you need it.
So far it sounds like I’m pretty down on the value proposition of overseas travel insurance. So why then did I decide to fork over the money for an expensive annual travel insurance policy for my gap year overseas?
There is one reason and one reason only that I bought annual travel insurance:
Medical and evacuation bills incurred while traveling overseas can be catastrophic.
Like, really, truly, life-altering, catastrophic.
This isn’t a fun game to play, but you have to think about the worst outcomes you might face while traveling:
You could break a leg hiking on a glacier near Juneau and need a helicopter to evacuate you out.
You could get bitten by a rabid dog in Bali and need to fly to Singapore for life-saving and pricey treatment.
Perhaps most likely, you could be severely injured in a car wreck (it happened to me once in my life already!) and need costly emergency care.
Or, in the tragic event that you pass away while traveling, your family could be saddled with enormous costs to repatriate your remains.
None of these things are fun to think about. But they are even worse to think about when you consider the consequences of enduring one of these tragic events while uninsured.
And remember what I said above about buying insurance? You should only do it to cover things that you can’t self-insure for. And, ultimately, that’s what compelled me to purchase a travel insurance policy before spending a year traveling the world: I simply couldn’t think of another way to guard against the potential financial ruin of an uninsured tragic medical event.
There are a lot of travel insurance companies out there, and I spent a lot of time comparing prices and coverages from many of them. Ultimately I chose to buy through World Nomads for a couple simple reasons:
If you’re looking for a travel insurance, I suggest hopping over to World Nomads to at least price out your trip there. Their interface is easy, so it only takes about 60 seconds. Or you can get a quote right now just plugging your details into this widget:
Thankfully, I’ve never needed to make a claim, but I’m still glad I made the purchase if not just for the peace of mind. I’ve continued to purchase single trip insurance from WorldNomads even after that long annual trip, and I do think that it’s generally a good travel tip and financial decision to seek coverage (heck, I’ve even suggested travel insurance as a useful travel gift for people going abroad).
But I’m also curious to hear other traveler’s experiences with annual travel insurance. Do you use it? Have you ever had to file a claim? Let me know in the comments so other travelers can make an informed decision about whether or not to purchase travel insurance.
Nate Hake has traveled to 65+ countries across six continents around the world and blogs about his travels at TravelLemming.com. He is from Denver, Colorado, and recently concluded a six month stint living in Mexico.