TOURISM - Travel: To insure or not? - Consumer advocates are divided over whether coverage for vacations is cost effective.

In a database of news articles over the last year about travel insurance, many advised people to buy it, while many others said skip it. With such conflicting information, what should you do?

It has become a big issue. More than $1.3 billion is spent annually on travel insurance, according to the most recent figures from the U.S. Travel Insurance Assn. Typical coverage costs 4% to 8% of the cost of the trip, based on the length of the trip, the destination, the traveler's age and the type of coverage. So, coverage for a $3,000 trip might cost $120 to $240.

The biggest problem for consumers is understanding the components of the insurance.

First, travel insurance often includes trip-cancellation insurance. It reimburses you for money lost on nonrefundable parts of a trip, such as hotel deposits and a prepaid cruise. It might be used when you have to delay, cancel or cut short the trip for medical reasons, for example.

Second, travel insurance could reimburse you for unexpected extra costs incurred because of transportation hassles, such as canceled flights, flight delays and lost luggage. It would reimburse for a hotel room stay near the airport, for example. This is a minor part of a package policy.

Third, it could provide medical insurance coverage while you're away from home, if your medical insurance doesn't cover hospital costs in foreign countries, for example. And it could pay for expensive medical evacuation -- by medical helicopter, for example -- if you're in a place with inadequate facilities.

The first question to ask yourself about travel insurance is whether something trip-related could land you in financial disaster. Insurance has the most value when it protects you from financial ruin, not minor annoyances.

For trip-cancellation insurance, by far the most popular coverage, the travel insurance industry likes to ask, "Can you afford to lose the $5,000 you spent on a vacation if you have to cancel it?"

That's a bit misleading because you already planned to "lose" $5,000 by paying for the trip. So of course you can afford it. What you really lost was the experience of the trip. Besides, you can often get back at least part of the money you spent on a trip.