Imagine that you and your spouse are all set to go on the trip of your dreams. You're taking a 7 day cruise to the Bahamas and visiting some of the most beautiful ports of call on this side of the equator, no work, no cell phones, no interruptions, just pure relaxation. You take the time off from work, head to the airport, only to find out that your flight has been cancelled due to mechanical problems, and you're going to miss the flight and thus the cruise. You get the money back from the airlines for your ticket, but you're out the cost of the cruise.

Situations like this happen more often than people realize, and many people lose a significant amount of money because they didn't consider that things might not go exactly as planned. Fortunately, there's a way that you can protect yourself financially in the event that your trip gets cancelled. It's called trip cancellation insurance, which pays you in the event that for whatever reason, you can't make it on your desired trip.

Trip cancellation policies should always be purchased when you are going on a cruise, taking a tour, or traveling on any sort of trip that requires you to pre-pay thousands of dollars. If you're going on a trip where you can easily get your money back in the event that you can't go, trip cancellation insurance probably isn't necessary.

These policies will give refunds to the consumer in the event that the traveler cannot make their trip because they become ill, or someone in their family becomes ill. They also will refund the traveler in the event that the company, the tour operator, air line, or cruise liner defaults and makes it so that you cannot go on said trip.

Trip cancellation policies will cost about 5% of the total cost of the trip, but this fee is well worth it. You never know when an unfortunate incident is going to occur that prevents you from going on your trip.

When you do buy trip cancellation insurance, make sure that you purchase it independently of the company providing the tour, cruise, or trip. When they sell you policies, they are generally only designed to protect the company and not the consumer. And be sure to pay for your trip by credit card so that you can dispute the charges if some part of the trip was inaccurately described to you. You do not have the option to dispute charges on checks and debit cards.

Learn more about this author, Matthew Paulson.
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