Is Travel Insurance Legalized Gambling?

Some people think “Isn’t travel insurance just legalized gambling? I think every time I don’t file a claim, the company wins. Right?”

I wouldn’t say it’s a gamble, though there’s risk involved with any kind of contract you enter into. Insurance is a unilateral contract because only one party, the insurer, has made a legally enforceable promise, such as to pay covered claims.

Here’s how I explain it:

Buying travel insurance is a risk: You are trading a known certainty (your hard earned money) for an unknown quantity – the promise of the insurance policy doing what it says. This is why I pre-screen the plans we offer.

People manage the risk of losing money on a trip different ways:

Some people use the same insurance company for every trip
Some self-insure
Some ignore travel / trip / cruise insurance altogether
Some take their agent’s advice
Some shop around
Some forget

Even though I sell travel insurance, I believe insuring a trip is a personal decision. None of these choices is inherently right or wrong, they are just a matter of personal preference.

Now, sometimes you have to lay aside your own prejudices in order to protect other people from the negative result of your decision. For example, when I was a life insurance agent, it surprised me how many people purposely ignored their family’s financial condition should they die young. They always thought they’d beat the system by living long. The trouble is that death is permanent & guaranteed.

If losing money by not traveling, having an expensive medical claim or needing a costly emergency evacuation wouldn’t burden you nor destroy your finances, then the need for travel insurance probably doesn’t exist for you.

If any of those events would cause you distress, consider getting travel insurance for your trip.

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