Having a policy that protects you against medical emergencies, trip cancellations and even lost or stolen luggage can put your mind at ease while traveling abroad. However, the price of travel insurance varies widely depending on variables such as your age, the length of your stay and the level of coverage you desire.
In this article, we break down the factors that affect the cost of travel insurance and offer tips to help you choose an affordable travel insurance plan.
The main factors that affect the cost of travel insurance
There are a lot of variables that can affect how much you pay for travel insurance. These include your age, the policy’s level of coverage, and the cost of your trip, among others.
Bear in mind, however, that travel insurance policies vary by provider, so some travel insurers may not consider all of the factors listed below when determining the cost of your plan.
Number of travelers
When traveling with a large group, the odds of someone in your party experiencing an accident or mishap increase. With that in mind, larger parties may pay more per person for their travel insurance to reflect the increased risk to the insurer.
However, not all insurance companies charge more for group coverage, so whether the total number of travelers in your party has any bearing on your premium will depend on the policy and company you select.
Moreover, many insurers offer group discounts, so you could pay less for a group policy than you would for individual policies for everyone in your party. And if you split the cost of the policy among the members of your group, you could further reduce your premium.
The price of travel insurance can vary widely depending on the policyholder's age. In general, the older the traveler, the greater the policy cost. This is because older adults may be more prone to experiencing medical problems abroad. Moreover, some travel insurance plans provide limited coverage for travelers over a particular age.
Older travelers should also be aware that while travel insurance companies don't consider the applicant's medical history when pricing a policy, most don't automatically include coverage for pre-existing conditions. This means their insurance may not pay out if they relapse or have symptoms of an illness or medical condition for which they sought or received treatment within a certain time frame before purchasing the policy.
Nevertheless, some travel insurers offer coverage for pre-existing conditions, provided the traveler meets certain requirements. These may include purchasing coverage within a specified number of days after making their initial trip deposit, insuring the full cost of the trip and canceling a few days before your departure date.
Coverage limits refer to how much your insurance company will pay you for a covered claim. Limits vary by company and plan as well as coverage type.
For example, a policy’s medical coverage limits could range between a few thousand dollars and hundreds of thousands of dollars, depending on the plan. On the other hand, limits for emergency dental tend to be much lower, typically between $500 and a few thousand dollars.
The higher your coverage limits, the more expensive the plan. This means you'd pay more for a policy that will reimburse you up to the full cost of the trip if you had to cancel or interrupt your vacation than for one that covers up to a few thousand dollars.
Similarly, purchasing add-ons that augment or expand your coverage, such as cancel-for-any-reason (CFAR) insurance or adventure sports coverage, can considerably increase the cost of your policy. CFAR coverage, for example, can cost as much as 50% of the total price of your plan.
According to Allianz Travel Insurance, the cost of policies that include trip cancellation and interruption coverage will partly depend on the total cost of the trip. This is because travel insurers that offer such coverage take on greater risk by insuring trips with higher pre-paid non-refundable expenses.
On another note, travelers who have invested a considerable amount of money in non-refundable trip costs may choose higher coverage limits to protect their investment, increasing the price of their policy.
However, when choosing coverage options and limits, don't go by the cost of your trip alone. Instead, consider your risks (including the activities you plan to participate in) and whether you already have some travel protection through your credit card.
The likelihood of you filing a travel insurance claim increases the longer you are on vacation. This means some travel insurance companies charge more for longer or multi-destination trips than shorter or single-destination trips.
The length of your trip may result not only in higher premiums but also in reduced coverage. Since some policies have restrictions or exclusions for longer trips or sell separate policies for longer journeys, it's important to read your policy details to ensure you have the right type and level of coverage.
Depending on your insurer, your destination may affect the price and scope of your travel insurance policy.
Some travel insurance companies consider the following destination-related details when pricing policies:
- Medical costs: Medical care costs vary considerably by country and even region. If you are visiting a destination with high emergency care costs, consider a travel medical insurance policy with higher coverage limits.
- Political stability: You may need higher trip cancellation or interruption coverage limits if you're visiting a region with political instability or a higher risk of terrorism or civil disturbances.
- Extreme activities: You'll likely have to purchase a policy add-on if you want to be covered against accidents and injuries that result from high-risk activities like bungee jumping or skydiving.
Make sure the coverage you're contemplating doesn't list exclusions that could prevent you from using it for your intended trip, activity or location.
Travel insurance pricing examples
Again, what you pay for travel insurance will depend on some or most of the aforementioned variables. In general, however, you can expect to pay between 4% and 12% of your trip cost on travel insurance.
The following are estimates to help you get a better idea of what you could expect to pay for coverage as a single traveler:
* We did not gather quotes for different destinations because some insurers don't account for that factor when pricing their policies. Moreover, we wanted to focus on price fluctuations based on the traveler's age and trip cost and length. These sample quotes were obtained from insuremytrip.com.
The cost of a group travel insurance policy will depend on the number of travelers in the group, their ages and the cost of the trip. A family of four traveling to Italy can expect to pay between $276 and $942 for travel insurance, depending on the policy and coverage limits they select. A group of 10, on the other hand, could expect to pay between $1,000 and $2,700.
Again, these are only ballpark figures. Your policy's final cost will depend on your personal and trip details and the company you purchase your policy from. To ensure you get the coverage you need at an affordable price, shop around and compare policy details and costs from different insurance providers.
How to save on travel insurance
Travel insurance can mitigate the financial risks associated with accidents and setbacks that can take place during a trip. However, coverage can get pricey, so let's review ways to cut costs without sacrificing protection.
Only buy the coverage you need
The best way to save on travel insurance is to know what kind of coverage you're likely to need during your trip. You can base this on your destination, non-refundable trip expenses, the length of your vacation, the value of your belongings and the types of activities you plan on participating in.
If you’re only traveling within your home country, you may not need to pay for separate travel medical insurance because your regular health insurance policy may already cover you. Similarly, you may not need baggage delay or loss coverage if you bring a few items on your trip.
Check if your credit card company offers complimentary travel insurance coverage
Some of the best travel credit cards offer complimentary travel insurance coverage for cardholders. The travel protection afforded by credit cards varies by issuer, but some common types include trip cancellation insurance, car rental insurance and medical emergency assistance. See if your credit card provider offers travel insurance, and if so, know what it covers.
Compare quotes from at least three travel insurance providers
Travel insurance costs vary widely from company to company. This means you can find the best deal on travel insurance by simply comparing quotes from different companies. Compare coverage and prices, and remember that the least expensive choice may not always afford you the best protection.
How to buy travel insurance
Inexperienced travelers may feel overwhelmed by the sheer number of travel insurance options available. But comparing plans and purchasing coverage doesn't have to be complicated or too time-consuming.
Here are some pointers to help you get started:
- Buy sooner rather than later: Insurers may require you to purchase your policy within a few days after your initial trip deposit to purchase CFAR coverage or be eligible for a pre-existing conditions waiver. And while it's true that you can purchase travel insurance at any time before your trip, doing so as soon as you book can ensure you have trip cancellation coverage right away, even before your scheduled departure date.
- Compare different policies: There are many travel insurance options, so shop around to get the right one. Look at coverage options and limits, deductibles and total cost when looking for the best travel insurance companies.
- Choose a reputable company: There are plenty of travel insurance companies on the market, so pick an insurer or marketplace with a solid reputation that's responsive to customer questions and concerns.
- Read the policy carefully: The best way to avoid unpleasant surprises down the road is to read and understand your policy details. Knowing what and how much your travel insurance policy covers can help you take the necessary steps before your trip and better prepare you for filing a claim if it ever comes to that.
- Ask questions: Don't hesitate to ask the travel insurance provider any questions about the coverage and limitations of a policy you’re considering.
- Purchase your travel insurance: Once you find a policy that works for you, you can buy it online or over the phone directly from a travel insurance agency or marketplace.
Summary of Money’s How Much Is Travel Insurance
Though estimates vary across the industry, you can expect to pay between 4% and 12% of the cost of your trip for travel insurance. Nevertheless, what you'll actually pay for a policy will depend on several variables, including your age, the cost of your trip, where you're going, how long you're staying and the coverage options and limits you select.
Before buying a policy, it’s best to research and compare several options to find adequate coverage at the right price.