Travel > Basics
Typically, travel insurance covers two things: trip cancellation/interruption and emergency medical evacuation. You can get reimbursed for lost baggage or trip delays, and it's a good perk to have if included in your policy, but not necessarily a good buy on its own. If you have no health insurance, or your coverage doesn't include health costs while abroad, you should look into getting extra medical or hospital coverage. Look over your health insurance policy carefully.
Your trip cancellation/interruption coverage will pay you for any nonrefundable deposits you put down on a trip if you can't go, or have to leave early. It will only pay the difference between what you originally paid and what you can get refunded from the agency you bought the trip through. You will have to get a refund from the agency first before making a claim on your travel insurance.
Trip cancellation/interruption insurance will only cover you if you have to cancel because of a covered reason, usually only a medical reason. Some will not cover pre-existing medical conditions. They may also cover unforeseen emergencies such as natural disasters and hijackings, even jury duty. But they probably won't cover you if you change your mind about your plans, or your job requires you to stay home.
Your trip cancellation/interruption insurance will most likely cover the losses you face if your tour company or cruise line goes out of business. But if you bought the policy from the company itself, you'll be out of luck.
Emergency Medical Evacuation
If you're planning on engaging in an adventurous or risky activity during your vacation, make sure that you have enough emergency medical evacuation coverage. If you find yourself on top of a mountain in need of medical assistance, your emergency medical evacuation insurance will cover the $20,000 it costs for the helicopter rescue. You also need to make sure that your policy covers such risky behavior.
This coverage does not make very much sense for someone that is going on a safe vacation in a location where quality medical assistance is available.
Make sure to verify what coverage will apply from your regular health insurance if you're traveling internationally. Most domestic US health plans limit your coverage to a maximum of 30 or 60 days outside the US, and HMO's and PPO's will likely impose severe out of network penalties for all but the most basic emergency care. More importantly, you will want to insure that you have 24 hour access to emergency evacuation if you are sick or hurt in an area where quality care is not available. For those over 65, Medicare will not cover treatment outside the US.