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Picture this: You’re getting ready to embark on a dream vacation you’ve been planning for months if not years. You scrimped and saved and put down a large down payment – or even paid in full in advance. Then you get sick or injured, either right before you leave or once you reach your destination. Or perhaps a hurricane or volcano springs up at the worst possible moment.

Does that mental image make you break out in a cold sweat? Does just thinking about it make you uncomfortable as you’re making your plans, or even prey on your mind while you’re on the trip, trying to enjoy yourself?

If so, travel insurance is probably for you. It can be an invaluable tool for peace of mind – whether you’ve got a lot of money invested in a trip, have a medical condition, or are just making a lot of stops where luggage can go one way and you in another. On the other hand, there are plenty of times when travel insurance really isn’t worth the extra steps and expense. Doing a little homework might uncover ways you’re already covered you didn’t know about, or workarounds to give you the same benefits as a pricy policy.

When you really do need travel insurance

When the unknown stresses you out: If you’re worried about something going wrong when you’re on your travels, it will be hard to relax and have fun. If that’s you ­– and you know if it is – go ahead and get a policy for the peace of mind. It will be worth every penny to know you have somewhere to turn if illness, injury, weather, unexpected unrest or luggage issues cause distress.

When you’re traveling internationally: As soon as you cross a border, any medical issue becomes a big, big deal. Even if you’re in perfect health, unexpected illnesses and injuries can happen to anyone. Do you know how much it costs to be air-lifted to a hospital from a steep backcountry trail in Patagonia? Want to find out?

When you’ve paid a lot up front: It only makes sense – the more money you have sunk into your travel plans, the more you should make sure that investment is protected. Lots of full-service vacations, including cruises, require large up-front fees and can be severely disrupted by unforeseen distress.

When you’ve got some expensive gear: Your backpack or iPhone is pricey enough, but how about the fancy – and expensive – DSLR camera you bought for the trip? Read the fine print of any travel insurance to make sure there are no exclusions for any high-dollar items you bring along with you.

When you travel a lot: Many travel insurance providers offer different policies for multi-destination trips, as well as backpacking and other long jaunts away from home. Don’t be afraid to shop around.

When you don’t need travel insurance

When you already have it: That might seem like a no-brainer, but it’s possible you already have travel insurance and don’t know it. Do you have a travel rewards credit card? If so, check your card’s details – it’s quite possible you’re all set. Just be sure to check what is covered and what isn’t. See below for what to look for in a travel insurance policy.

When you can afford to take the loss: Travel insurance is usually set up for big, non-refundable expenses that would take a bite out of your wallet if something unexpected happened. When you’re just making a short or inexpensive domestic trip, the added cost of travel insurance might be more trouble than it’s worth.

When you can find other ways to get the same benefits: With a little research in your planning, you might be able to get some guarantees without the expense. For instance, you can often find accommodations with free cancellation policies leading right up to the day of your stay. And airlines often have policies in place for travelers when their flight is canceled or delayed.

When you’re traveling domestically: If you already have medical insurance or coverage in your own country, you’ll likely be OK to make domestic trips without an extra policy. Especially if you’re not checking any luggage and are staying somewhere you can cancel on short notice.

What to look for in travel insurance

Be covered for where you’re going: This sounds obvious, but make sure your coverage will apply where you’re going, especially if you’re visiting popular destinations just outside what may be considered Europe, such as Morocco and Turkey.

And what you’re doing: Attempting to ski? Going rock climbing? Diving? Make sure your coverage extends to that. Read the policy carefully to see if there are restrictions relating to, for example, going off designated trails. Best of all, plan ahead before you go to be sure you’re covered for any activity you might take.

How much coverage? It might seem like your medical provision amounts to mind-boggling millions that you will never need, but remember this is worst-case-scenario stuff. As dramatic as it sounds, imagine the cost of you having to be medically repatriated. The highest levels of coverage are worth it if you’re going from another country to the USA, where health care is expensive.

Take your document – and a copy: Travel with your insurance documents, and also have a copy on email. Make sure you store the contact number of your insurer in your phone.

Drinking and insurance don’t mix: Certain policies will be invalid if you are drunk or under the influence of drugs, so go easy when on the road.

‘Fess up: Travel insurance is mostly health insurance, which is why the cost increases hugely when you get to retirement age. For it to be effective, every pre-existing condition must be declared, otherwise your policy could be worthless and you could end up with a very large bill.

‘What to look for in travel insurance’ is reprinted from .