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What is Travel Insurance, and How Does Travel Insurance Work?

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September 12, 2022


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If you’re getting ready for your next family vacation, or if you’re all excited about your upcoming international holiday, you probably have a long checklist of to-dos to take care of. But does travel insurance feature on your list yet? 

In case you answered no to this question, you need to add this essential financial product to your list right away. That’s because travel insurance is not just a convenience today — it’s a necessity. 

Not sure what this type of insurance is? Or why it should be an essential part of your domestic and international travels? Well, let’s begin at the basics and take a closer look at what travel insurance is and how it works.

What is travel insurance?

When you take a trip to another city or country, whether it’s for work or fun, there’s always the risk that some contingencies may occur. You could lose your baggage in transit. Your flight may be delayed or cancelled. Or worse, you may lose your passport abroad. It’s also possible that you or someone in your family may fall sick during the trip.

All these scenarios have one thing in common — they lead to unexpected financial liabilities and expenses. You can try and account for these emergencies in your budget. But there’s no way to estimate how much you will have to set aside for such scenarios. 

Here’s where travel insurance can be extremely useful. It is a contract between you and a travel insurance service provider (or the insurer). Here, the insurer agrees to protect you from certain specific financial risks or losses that may crop up on your trip. In other words, the insurer takes over the risk associated with your travel-related emergencies in exchange of an amount you pay before the trip. 

That leaves you free to enjoy your trip to the fullest. 

Are there different types of travel insurance plans?

Yes, there are different types of travel insurance plans that offer varying degrees of coverage. Check out the most common kinds of trip insurance policies, and what they typically cover.

  • Domestic travel insurance

This kind of insurance exclusively covers contingencies that may occur when you travel domestically, within India.

  • International travel insurance

This type of trip insurance is ideal if you are travelling internationally. You can find international travel insurance for specific foreign destinations.

  • Senior citizen travel insurance

Travel insurance of this kind is specifically designed for senior citizens travelling either domestically or internationally.

  • Student travel insurance

Students who are travelling to a different place to pursue their education can benefit from this kind of insurance, which specifically covers emergencies that they may face in a different city or country.

  • Multi-trip insurance 

If you are a frequent traveller, you can benefit from this type of insurance. It offers coverage for around a year, typically. So, multiple trips will be covered by your plan.

  • Medical travel insurance

Medical travel insurance offers extensive coverage for different types of medical emergencies that may occur on your trip. 

  • Pregnancy travel insurance

As the name indicates, this is a kind of insurance that is particularly beneficial for pregnant travellers. It covers many pregnancy-related emergencies.

What does travel insurance cover?

The exact list of items covered will vary slightly from one policy to another, based on the type of insurance and the destination. However, in general, here are the contingencies that are typically covered by a travel insurance policy.

  • Trip delays
  • Trip cancellations
  • Trip interruptions
  • Loss of baggage
  • Loss of passport
  • Baggage delays
  • Damages to your baggage
  • Medical emergencies
  • Emergency medical transportation
  • Third party liabilities
  • Emergency evacuation due to natural calamities or terrorist activities
  • Injury or accidents to any of the passengers covered
  • Death of any of the passengers covered
  • Repatriation of the remains

What does travel insurance not cover?

It’s also important to understand what is not covered by a typical travel insurance plan. Here is a preview of the common exclusions. 

  • Pre-existing illnesses
  • Pre-existing conditions and circumstances
  • Dental treatments
  • Complications due to childbirth and pregnancy
  • Loss or injuries on account of adventure sports or activities
  • Suicides

The exact list of exclusions will vary from one plan to the next. So, ensure that you take a closer look at the terms and conditions of the coverage before you buy your insurance plan.

How does travel insurance work?

Before you go ahead and insure your trip, you need to first get a good idea of how travel insurance works. Here is a general overview of how this financial product works. 

Stage 1: You browse through different travel insurance plans

You can check out the different types of travel insurance online and check out the features and benefits they offer. You can even compare your options and choose the plan that best meets your requirements.

Stage 2: You buy the plan that is right for your trip

Once you’ve found the right plan for your trip, you can pay the premium due on the policy and purchase it. Make sure you enter the correct details of the trip and the passengers who will be accompanying you.

Stage 3: An insured incident occurs

You never know when an incident can occure on your journey. This is why you should be aware of the inclusions and exclusions, so you can identify if any of the covered contingencies occur during your vacation or trip.

Stage 4: You inform the insurer about the incident

In case such an incident occurs, make sure you first intimate your insurance provider about the situation. Let them know the details of the incident and inform them that you will be raising a claim.

Stage 5: You file a claim on your travel insurance plan

The next step is to fill out the claim form and submit it to the insurance provider, along with any other documents they may require. Ensure that you fill out the claim form accurately and completely, so the process of claim settlement is smooth and hassle-free.

Stage 6: The claim is settled

The insurer will verify the details you submit and assess the claim form. If approved, your claim will be settled as per the terms and conditions of the policy. 

Summing up

This sums up the essentials of what travel insurance is and how it works. So, if you’re planning a vacation or a work trip any time soon, make sure that buying travel insurance is at the top of your to-do list. You can even buy travel insurance online easily. All it takes is a few minutes, and you can insure your trip comprehensively. 

Frequently Asked Questions

1. What does travel insurance cover in general?

Most travel insurance plans cover trip delays and cancellations, indefinite baggage delays, loss or damage of baggage, loss of passport, medical emergencies, injuries, disability or death, and repatriation of remains, among other things.

2. Is it necessary to have travel insurance?

Yes, travel insurance is a necessary financial product, especially if you do not have a contingency fund. This kind of insurance protects you from the financial risks or losses that may occur during your trip.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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