Originally Posted by
Tourist in MSN
I have heard the lottery referred to as a tax on morons, but I have never heard of anyone putting insurance in the same category as the lottery.
In both cases, one spreads a larger payout to a small number of individuals - coming from many people paying a smaller amount. Since there is profit to be made, mathematically, the "odds" are less than even.
The difference between the two is that an insurance payout is to mitigate an adverse effect and a lottery payout is a favorable event. For me at least, there is not a symmetry between the two. If I win the lottery, that is nice but likely not as significant an effect as the adverse effect in the opposite direction of a huge judgment or uncovered illness.
The way I apply this to insurance in general, and to trip insurance in particular is that I will self-insure for smaller costs that I can reasonably handle while making sure I am covered for the largest risks. In regular insurance, it often means taking higher deductibles as a tradeoff for bumping the maximum umbrella insurance amounts.
When it comes to travel insurance, I am willing to forgo trip cancellation insurance on trips that aren't particularly expensive - and willing to not have as good coverage on smaller incidental medical items. In return, I want to make sure I am covered for the largest costs that can really mount, e.g. extended hospital stays or even some large evacuation costs.
I had an interesting dilemma the opposite direction with my current extended trip. My home country is the US and I will be outside the USA bicycle touring for >330 days in the calendar year 2017. The number 330 is significant because the US mandate to carry health insurance can be waived if you are not in the USA for >330 days in a twelve-month period. I initially thought about dropping my home country insurance and looking instead for a "catastrophic only" policy that could kick in for the highest costs if a medical issue caused an evacuation back to the USA. I didn't quite put in the effort to find such policy - so did end up continuing my home policy, trading some additional costs for sleeping a bit better at night...including those few short trips I had back in the USA in 2017.