Travel insurance explained

Travel insurance can help provide extra protection against the various financial risks that can arise while you’re away.

According to the UK government, around 20 million consumers* purchase travel insurance each year. Understanding the details behind your documents can help you find a policy that's suited to your needs and ensure you make the most of it too. In this article, we’ll outline how travel insurance works, what to consider when buying your policy and the types of cover available.

What is travel insurance?

Travel insurance is designed to cover the costs and losses associated with unexpected events that can occur whilst travelling.

What is travel insurance for?

Whilst levels of cover will differ from one policy to the next, travel insurance typically provides financial protection against a variety of risks including:

• Medical emergencies
• Trip cancellations and delays
• Lost, stolen, or damaged baggage and belongings
• Assistance with other unexpected costs encountered during travel

Some travel insurance providers also offer 24/7 assistance services as part of your package. This gives you access to a helpline during emergencies and other support services while travelling.

You can read more about the reasons to buy travel insurance in our article here.

What is travel medical insurance?

Travel medical insurance is specifically designed to cover any medical costs that may arise during your trip. It can help you access, and pay for, services such as doctor visits, hospital stays and evacuation services.

Travel medical insurance can typically be bought in two ways:

• A stand alone travel medical insurance policy, dedicated to medical protection, that is unlikely to cover other types of emergencies such as lost luggage or legal expenses
• Within a travel insurance policy either as part of the standard offering or enhanced with optional extras

It’s important to note that some policies can exclude pre-existing medical conditions (you can read more about this in a dedicated article here). If you have one of these conditions, you may need to purchase additional cover or use a specialist provider, who caters to customers with pre-existing medical conditions.

How does travel insurance work?

Below we touch on some of the key steps involved in buying or utilising travel insurance, looking at how each stage typically works.

Buying a policy

You can buy travel insurance directly from insurance companies. For example, you can get a quote for Age Co Travel Insurance here.

Travel insurance can be purchased for a single trip or as an annual plan. Aside from these two core categories, there’s a range of policies available that are tailored to specific types of trips and travellers (for example, cruise trip insurance or family policies). We’ll explore these options in more detail later in this article.

Pricing of premiums

A premium is the amount you pay to your insurer for covering your risk (essentially, the cost of the travel insurance policy). This cost varies depending on factors such as:

• Your age
• Medical history
• The duration of the trip
• Cover limits
• Your destination
• The activities you have planned

You can also increase your protection with additional cover options and higher cover limits - though, bear in mind, this may result in higher premiums.

Setting an excess

A policy excess is the amount of money that you agree to pay out of your own pocket towards any claim you make on your travel insurance. When you purchase a travel insurance policy, you may have the option to choose the amount of excess you are willing to pay, if you need to make a claim. A higher excess usually results in lower premium costs, as you're reducing the financial risk to the insurer, while a lower excess typically leads to higher premium costs.

Filing a claim

If you need to make a claim, you must contact the insurance company as soon as possible to initiate the process. Many providers stipulate that any claims must be made within a certain timeframe. For example, it may state in the terms and conditions a claim be raised within 30 days of a trip ending.

To support your travel insurance claim, you may be asked to provide documentation and receipts. If you’re unsure of what evidence you’ll need to provide, it's advisable to check your policy documents or reach out to your provider for guidance.

Once your claim has been submitted, the insurance company will then assess the claim and provide compensation according to the terms of the policy.

What types of travel insurance are there?

As we mentioned above, there are two core categories of travel insurance available.

• Single trip travel insurance: short-term cover that covers you for a particular journey
• Annual or multi-trip insurance: a rolling level of cover that protects multiple journeys within 12 months

However, there’s also a variety of more specific policies and optional extras that you may come across while shopping for travel insurance. These options have been designed with certain types of travellers or trips in mind, so it’s worth exploring them to see what benefits are on offer.

Common themes include:

High-risk activity policies (for example, a winter sport, water sport or cruise trip policy)

If your travels involve a sport, hobby or activity that is deemed higher risk by insurance companies, it’s unlikely a standard travel insurance policy will offer the cover you need. If this is the case, you will need to enhance your insurance with additional cover where available or opt for a specific policy tailored to your type of trip.

Destination-based policies (for example, a European, worldwide or USA policy)

Some insurance providers will limit cover to a certain destination, for instance just to Europe, while others will provide worldwide cover. This is because some areas, such as the USA, have higher medical costs and others have higher health-related risks. If you only intend to travel to Europe, you may not want to pay a premium designed to accommodate USA medical bills.

Policies catering for different group sizes (for example an individual, family or group policy)

When you travel with friends, a partner, or your family, it can make sense to group everyone under the same policy for ease and potential cost efficiencies. However, if a member of your party needs specialist cover due to their age or medical conditions, it can impact the cost of the policy for everyone else.

Policies tailored to those travelling (for example, a pre-existing medical condition or age-specific policy)

Details such as your health and age can also be deciding factors when picking which policies best suit your needs. 

In terms of health, some standard policies may exclude cover for pre-existing medical conditions, such as cancer or heart disease. To secure the insurance needed to cover your potential medical requirements, you may want to take out a policy that’s dedicated to medical cover or has an enhanced offering. 

Some providers have upper age limits in place for their policyholders, these limits typically range from 65-85 years old. However, it is a myth that older people can't find quality cover. If you’re over 65, it's worth seeking out companies that specialise in insurance for those in later life. This way, you know the features and benefits on offer have been chosen with you and your needs in mind.

What to consider when buying travel insurance

There’s a lot to think about when you’re buying travel insurance, from price to policy type. Below we list some of the factors you may wish to consider when trying to pinpoint the most suitable solution.

Your individual needs

Evaluate your travel plans, activities, and destination to determine the type of travel insurance policy, benefits and features that are most valuable to you. For example, if you’re heading out on a cruise during your trip, it pays to make sure this cover is available.

The calculated risks

Where possible, calculate the financial risks involved in your trip, such as what costs would occur if you had to cancel or your baggage was lost, meaning your possessions would need replacing. This will help guide you in buying enough cover to secure the compensation you’d require on holiday, without overpaying for cover you wouldn't need.

The terms and conditions

Always read the terms and conditions of any policy you’re looking to buy. Alongside the cover on offer, you should check any excess costs that may be charged in the event of a claim to make sure this is agreeable. You can also identify any exclusions or restrictions that could impact your protection.

Having a better understanding of travel insurance and how it works can pay off when picking out a policy. Click here to learn more about Age Co Travel Insurance policy features. 

*Stat pulled from  ‘Are you covered? Travel insurance and its regulation’ report.