Overseas medical insurance is totally unnecessary, except when it isn’t.  If you bought it and never used it then you wasted your money right?  But what about the person who bought it and actually used it?  Well, they got good value for their money!  So, are you going to use it or not?

The nature of any insurance is that you are protecting yourself from a possible risk:  risk of fire, theft, car accident, medical crisis…Many aspects of life incur a risk that we don’t insure:  crossing the street, riding our bike, sending our children off to college.  Overall, we calculate a risk in terms of its probability of occurring as well as its potential financial impact on our lives and then decide which risks to insure and which to leave uninsured.

Before you even think about purchasing travel insurance, investigate if you already have coverage.  Does the health plan you currently have cover you while you are away on a trip?  If so, no additional medical coverage is necessary.  If not, or if you will be gone longer than your plan allows, then you need to do some serious thinking.  Am I willing to take the financial risk of becoming sick and having to pay for everything out of pocket?  While health care tends to be cheaper everywhere outside the US, the need for serious health care can add up regardless of what country you become sick in.  In addition, what if you don’t want to be sick in another country?  What if a serious illness occurs and you need to be evacuated for proper treatment?  If you think health care is expensive, check out the rates for medical evacuation; it’s not pretty.  On the other hand, if you check out the rates for overseas medical insurance, you will see that the cost is not as much as you might think and therefore may well be worth your while.

Overseas medical insurance or an international policy is just that – international.  It will cover you while you are in another country but it will not cover you in the US (not sure how policies work when issued to citizens of other countries).  Therefore you need to make sure that you are still insured “back home.” If you are leaving for a vacation or a short trip, this probably isn’t an issue to be concerned with.  You were planning on coming back home so you hadn’t even thought of disposing of your existing coverage.  On the other hand, if you are swapping your current lifestyle for a nomadic one for a period of time, terminating your current coverage is not only possible but even probable.  We left the country for a year and in order to do so quit our jobs.  No job, no health insurance.  At first we were fine with the idea since we had obtained an international policy.  But then we got to thinking…If we had a serious illness or injury and wanted to be transferred back home for treatment, we would have no coverage.  Our international policy would cover the evacuation (if medically required) but not for any treatment back in the US.  We had to obtain a domestic policy (we chose a high deductible plan) on the off chance that this could happen.  Unlike the international policy, the domestic policy was expensive so you’ll have to weigh the risks/rewards of owning the extra policy.

International medical policies often come with some additional bells and whistles that can add a lot of cost to your polic, namely trip cancellation/trip interuption insurance.  With trip cancellation insurance, should you have to cancel your trip prior to your departure for covered reasons, you will receive reimbursement for the cost of your trip.  This works well for organized tours, cruises or other pre-paid trips.  It’s not so easy with independent travel where most of your expenses occur on a day to day basis.  This type of coverage is a little pricey so you might want to evaluate the likelihood of the need to cancel a trip:  chronic or terminal illness; a dying family member.  If the risk of cancelling the trip is low, you might want to forgo this coverage.  We chose to bypass this coverage and eat our pre-paid costs if necessary.

Trip interuption on the other hand kicks in after the trip has already begun.  Should your trip have to terminate due to covered reasons (medical or death), you will be compensated for the unused portion of your trip.  This type of coverage is not as expensive as trip cancellation and may even be included in the medical coverage you purchase (as was the case with our policy).

In the end, our family of four left the country for one full year with an international medical policy that included trip interruption, but not trip cancellation, as well as a very high deductible domestic policy.  The cost for the international policy was $2000 for the four of us.  The cost for the domestic policy was $3434 for the four of us.  We didn’t use a cent from either policy!  We don’t feel it was money wasted but instead feel grateful for our health and the security we had over the course of the year.  It doesn’t always work that way however.  My parents had a European River Cruise booked to the tune of $6300 each when my father was diagnosed with lung cancer.  They had to cancel the trip and since they had trip cancellation coverage, received a full refund for the trip they were never able to take.  Two years after my father’s death, my mother took a trip to China.  She fell and hit her head and ended up in the hospital for a week.  Since she had international medical, trip cancellation and trip interruption insurance, she had all of her medical expenses paid for and received reimbursement for the unused portion of her trip.  That’s why they call it insurance.

Evaluate your circumstances, determine which risks you want to insure versus those you want to retain and then do your homework to find coverage that will insure only those risks that you want to transfer.  If you plan properly, you will feel good about your decision regardless of the outcome.