Travel insurance might be a good idea if you're injured abroad or if you have to cancel your trip because of illness. But be sure to read the policy to understand what's covered and what's not. Insurance usually costs 4 to 8 percent of the trip cost.
A close relative dies just before you leave for a Caribbean vacation, and you have to cancel your nonrefundable trip to attend the funeral. Or, you're hiking in the Alps, have an accident and need to be airlifted off a mountain.