Travel Insurance Explained: Coverage Types, Average Costs, and When to Buy It

Travel insurance is not a single product. It is usually a bundle of separate benefits — trip cancellation, medical coverage, baggage protection, and emergency assistance — sold together as one policy. Regulators and industry groups describe these core pieces in similar terms, even though individual insurers package and price them differently.

What travel insurance actually covers

The U.S. Travel Insurance Association (UStiA) describes travel protection as bundling insurance benefits — such as trip cancellation, interruption and delay coverage, medical and dental emergencies, and lost or damaged baggage — together with assistance services such as a worldwide emergency hotline and medical evacuation.

UStiA also notes that travel protection products can include coverage for damaged or stolen rental cars and losses when a travel supplier goes bankrupt. Separately, the National Association of Insurance Commissioners (NAIC), the U.S. insurance regulators' umbrella body, says trip cancellation/interruption is the most purchased benefit, accounting for 94.7% of travel protection products bought by consumers.

NAIC also flags an important distinction: travel protection bundles often mix true insurance (which falls under state insurance regulation) with non-insurance products such as cancellation-fee waivers and travel assistance services, which do not.

How much travel insurance costs

Cost-comparison data published by MoneyGeek, dated September 2026, puts average U.S. travel insurance premiums at 1.7% to 12% of total trip cost, depending mainly on traveler age and coverage level. For travelers aged 20 to 50, the average works out to about 3.9% of trip cost; at age 75 it rises to roughly 11% or more.

Age affects price more than many travelers expect. MoneyGeek's figures show a 30-year-old paying about $201 for the same $5,000-trip policy a 20-year-old pays $197 for, while a 65-year-old pays around $394 — roughly double — and a 75-year-old pays about $552.

Destination matters too. MoneyGeek's data lists Canada at an average of about $200 for comparable coverage, versus roughly $275 for India, $285 for Brazil, and $290 for Morocco, which it attributes to higher potential evacuation costs in those destinations.

NAIC separately estimates that travel insurance policies generally run about 5% to 10% of total trip expenses — a broader range that is consistent with MoneyGeek's age- and plan-based breakdown.

Cancel For Any Reason (CFAR): the add-on with strict deadlines

Cancel For Any Reason, or CFAR, is an optional upgrade that lets a traveler cancel for a reason not listed in the standard policy — such as simply changing their mind — and still recover part of their money. According to a breakdown published by Experian, most CFAR policies reimburse only 50% to 75% of the trip cost, not the full amount paid for standard covered reasons.

Experian's guide states that CFAR typically must be purchased within 10 to 21 days of the traveler's first trip payment, and many insurers require the traveler to insure 100% of their nonrefundable trip cost to qualify. CFAR also raises the overall premium: Experian puts the added cost at 40% to 50% on top of the base policy price, giving the example of a $200 base policy rising by roughly $80 to $100 once CFAR is added.

Why medical and evacuation coverage matters abroad

NAIC's consumer page states that common exclusions across travel policies include pre-existing health conditions, pandemics, civil unrest, pregnancy, and high-risk activities — all points it advises travelers to check in the policy wording before buying. It does not give a single universal definition of "pre-existing condition," since insurers apply their own look-back periods and waiver rules.

UStiA describes assistance services — such as the worldwide emergency hotline — as distinct from the insurance benefits themselves, since they are meant to provide real-time help during an emergency rather than later financial reimbursement.

Single-trip vs. annual plans

Travel insurance is typically sold either per trip or as an annual (multi-trip) policy covering any number of trips within 12 months, instead of requiring a new policy before each trip. NerdWallet's comparison of annual plans describes them as offering "the best mix of cost, coverage and flexibility."

When you actually need it

• International trips, especially to destinations where your regular health plan does not pay for care abroad — NAIC lists medical emergencies and evacuation among the core benefits travelers rely on.
• Trips with large nonrefundable prepayments (flights, cruises, tours), since trip cancellation/interruption is the single most-purchased benefit according to NAIC, covering 94.7% of travel protection products bought.
• Destinations where emergency medical transport would be expensive, since MoneyGeek's data shows evacuation-risk destinations like India, Brazil, and Morocco carrying noticeably higher average premiums than lower-risk ones like Canada.
• Travelers who want flexibility to cancel for personal reasons not otherwise covered, provided they buy CFAR within the 10-to-21-day window Experian describes and accept that only 50%-75% of costs will be reimbursed.
• Travelers who take multiple trips a year, who may find an annual plan — covering any trip within 12 months — more practical than repeated single-trip purchases.