How Does Travel Insurance Work? This Is What You Need to Know

Basil Mahadeo
4 min readApr 2, 2022


Every year, much-anticipated vacations are ruined due to personal injury, illness, flight cancellations, and other issues. No matter the reason for vacation plans that don’t follow through, there’s an easy way to get around this issue: travel insurance. Here’s what to know about what travel insurance is and how it works.

What Is Travel Insurance?

Travel insurance is a type of insurance policy that is used to protect people from financial risks and losses that occur while traveling. These losses can include anything from a lost suitcase to a medical emergency in a foreign country.

On top of these financial protections, travel insurance can provide access to assistance no matter where you are in the world. For instance, if someone with a travel insurance policy breaks their leg while outside Guyana, they’ll be able to get medical assistance no matter where they are.

Keep in mind that not every travel insurance comes with these benefits. The exact benefits a policy offers will depend on the plan chosen. Additionally, travel insurance can’t — and doesn’t — cover every single situation that could arise. However, these policies can cover most issues and hazards that you might experience. Just read over the particular travel insurance policy being offered to get an idea of what exactly it covers.

Finally, travel insurance is designed to cover unforeseeable events. Individuals won’t receive a payout for things that are within their control. For example, if a person buys a travel insurance policy after borders are closed due to COVID-19, they likely won’t be covered for any losses.

Types of Travel Insurance

There are several types of travel insurance that a person can take out. Here are a few of the major categories of travel insurance to investigate.

Trip Cancellation or Trip Interruption Insurance

This type of insurance policy covers events that cause a person to cancel their trip. It may also cover issues that necessitate travelers return home from vacation early.

Medical Insurance

Medical travel insurance plans keep individuals medically covered even when they’re outside Guyana. Individuals can visit doctors practicing abroad if they get sick rather than having to cancel their trip and immediately head home.

Evacuation Insurance

Evacuation insurance policies cover policyholders if they have to move to another location to get medical treatment in the case of an emergency. This policy also covers evacuation costs due to political or civil unrest in the country they’re visiting.

Baggage and Personal Items Loss

One of the most common types of travel insurance is Baggage and Personal Items Loss Insurance. These policies offer reimbursements if a person’s bags are damaged, lost, or stolen while traveling.

Life Insurance

There are three types of travel life insurance policies: air flight accident insurance, common carrier insurance, and accidental death insurance.

How Does Travel Insurance Work?

In most cases, travel insurance policies reimburse the policyholder for any qualifying financial losses following the submission of a travel insurance policy claim. When the insurance company receives and approves the claim, a payout is made to the policyholder.

Policyholders who receive a payout usually get their money via direct deposit. However, sometimes they are sent a paper check or the money is refunded to a debit or credit card. It’s important to be aware that this isn’t the only way travel insurance policies work. Sometimes, the process goes a little bit differently.

For individuals who use their policy for medical issues overseas, for example, the travel insurance company usually pays the medical fees upfront. Or it might provide a fixed payout each day to help cover the person while abroad.

What to Know about Buying Travel Insurance

Anyone wanting to purchase a travel insurance policy needs to be aware of a few key facts. These will affect their purchase and help them choose the best policy for their trip.

For one, it’s important to know that travel insurance policies vary greatly. Their coverage, exclusions, and costs can all change drastically depending on which insurance provider a person chooses. Before signing any contracts, a buyer should check all the disclosure statements. That way they’re fully aware of what they’re getting into and what additional costs they could incur.

On top of that, travelers need to be aware that they can purchase coverage for a single trip, multiple trips, or for a year of travel. The exact package they purchase will depend on how often they travel and how much coverage they’ll need during that time.

Another thing for travelers to note is that travel insurance premiums are based on a few different factors. The age of the traveler, the cost of the trip, and the destination can all influence how much a travel insurance policy costs.



Basil Mahadeo

Basil Dahana Ram Mahadeo is a Director of GBTI for the past twenty-two (22) years.