When It Pays to Buy Travel Insurance

Question: I’m going on vacation to the Caribbean this summer. Is it a good idea to buy travel insurance? What should I look for in a policy? - P.L., Boston

Disaster-Proof Your Vacation With Trip Insurance

Answer: Travel insurance can be valuable if you would lose a lot of money in nonrefundable deposits if you had to cancel your trip. More important, it can pay for medical evacuation—which is expensive and usually isn’t covered by health insurance—if you are sick or injured while traveling and need to be transported.

Travel policies often cost 4% to 10% of your total trip cost, says Steven Benna, of Squaremouth.com, where you can compare policies. Most policies will reimburse you for nonrefundable deposits if you must cancel or interrupt your trip because of weather or because you or a family member becomes ill. (Most policies won’t cover preexisting health conditions that were diagnosed or had changed typically within 60 to 180 days before you bought the insurance.)

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You will be traveling to the Caribbean during hurricane season, so review the storm coverage. Many policies pay if flights are grounded for 24 hours or if the hotel is uninhabitable. If you want to play it safer, you can find insurers that will reimburse you if a hurricane warning is issued within 24 or 48 hours of your trip, says Julie Loffredi, of InsureMyTrip.com, which allows you to compare policies.

Squaremouth recommends buying $100,000 in medical evacuation coverage for international trips, or $250,000 if you’re going on a cruise or to a remote spot.

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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.