Travel Insurance and Per-Unit Costs

A couple of weeks ago, my travel insurance (with World Nomads) ran out, and so I decided to renew my insurance, using per-unit costs to find the cheapest and most cost-effective plan.

Using per-unit costs when comparing products – be it canned fruit, bags of pasta, or travel insurance, will save you money.  If you don’t compare products with per-unit costs, you will waste money that could be put towards a more enjoyable trip or vacation!

To use per-unit cost, I took a look at World Nomads‘ pricing charts (for a US citizen from New York), which shows price for different travel times, and calculated the effective per-unit (per-month) cost.  This tool is especially useful if you don’t know how long you’re traveling for, and want to buy insurance “as you go”

Duration Standard price “Explorer” price Standard per-month cost “Explorer” per-month cost
1 week $49 $65 $196 $259
2 weeks $69 $91 $138 $183
3 weeks $85 $115 $113 $153
4 weeks $100 $140 $100 $140
5 weeks $114 $157 $91 $126
6 weeks $129 $184 $86 $122
7 weeks $146 $208 $83 $119
2 months $154 $211 $77 $106
3 months $187 $250 $62 $83
4 months $216 $287 $54 $72
5 months $253 $335 $51 $67
6 months $291 $386 $49 $64
7 months $384 $509 $55 $73
8 months $490 $649 $61 $81
9 months $596 $791 $66 $88
10 months $701 $931 $70 $93
11 months $807 $1,071 $73 $97
12 months $913 $1,212 $76 $101

As you can see, if you buy very short-term travel insurance, you are paying a significant premium – insurance for a week will effectively cost you $200 per month!  However, as you buy insurance for longer trips, the per-unit cost drops, down to $50 per month.

But then a curious thing happens: for trips of more than 7 months, per-unit costs increase! This makes no sense!  Instead of buying 12 months of insurance for $913, you could buy two 6 month blocks of insurance for $291 + $291 = $582 — for a savings of more than $300!

Using this chart, the results of a per-unit cost analysis, I chose to buy 4 months of travel insurance.  Yes, I could get even cheaper per-month insurance by buying a longer duration, but I don’t know how much longer I’ll be traveling.

In the end, even if you save a lot of money by using per-unit costs to buy something cheaply and efficiently, it’s still wasted money if you never use it.

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