Is travel insurance really necessary?

Most people would probably answer no. Why would you drop a hundred dollars or more on something you'll probably never have to use? A hundred bucks. That's about 15 of those rum based drinks you get in a coconut shell at the beach. If you are traveling domestically, your regular health and homeowners insurance should cover hospital visits and lost or stolen belongings.

Traveling aboard is another matter, however. Most medical insurance plans do not cover you if you are outside the country. As a travel gent who was interviewed in a recent piece on travel insurance seen on CNN.com warns:

"The time to find out that it doesn't cover you isn't when you're sitting in the emergency room...And Medicare doesn't cover you in Canada or Mexico when you fall off the bar stool."

In addition, many travel insurance policies cover things like cancellations and missed flights. These are far more common than catastrophic illnesses, but you have to read the fine print before signing to make sure what is and isn't covered. The US Association of Travel Insurers offers is a good place to get some info.

The same CNN story points to examples of travelers who were forced to spend tens of thousands of dollars because of unforeseen illnesses. Such stories are few and far between. For the most part, in purchasing travel insurance, you are purchasing a little peace of mind. There will be no "what ifs" like "I want to try this dodgy local cuisine, but what if I get sick."

My only advice: when traveling aboard in the developing world, at least consider some sort of coverage for catastrophic events. This means that if you are in a dastardly traffic accident, for example, you your insurance will pay for you to be airlifted to a modern hospital.