Considering Travel Insurance

There are three primary kinds of travel insurance: trip-cancellation insurance, medical insurance and lost-luggage insurance.

Trip-cancellation insurance is a good idea if you've paid a large portion of your vacation expenses up front, such as for an air/hotel package deal, an all-inclusive resort, or a cruise. Strongly consider this coverage, particularly if you have young children, because you never know when accidents or illnesses can crop up.

But the other two types of insurance - medical and lost luggage - don't make sense for most travelers. Your existing health insurance probably covers you if you get sick while on vacation. Homeowner's insurance usually covers stolen luggage if you have off-premises theft. Check your existing policies before you buy any additional coverage. The airlines are responsible for $2,500 on domestic flights if they lose your luggage; if you plan to carry anything more valuable than that, keep it in your carry-on bag.

Some credit cards offer automatic flight insurance against death or dismemberment in case of an airplane crash. Trip cancellation insurance costs approximately 6% to 8% of the total value of your vacation.