Paul Clitheroe's Making Money: October 9

It’s that time of the year when our thoughts turn to summer holidays, but amid the excitement of choosing a destination, don’t forget to arrange travel cover.

In the last three years, one in three Australians have headed off internationally without the protection of travel insurance.

If you run into trouble overseas, it can be far more than just inconvenient. Lost baggage, stolen smartphones and delayed flights can leave you with unexpected bills.

But if you become unwell or injured, the cost can be high enough to bring on altitude sickness. Medical treatment in the US, for instance, can cost several hundred dollars per day. Being repatriated back to Australia for treatment from popular destinations like Indonesia can leave you with a bill of about $94,000.

The scary thing is that a recent report by the Department of Foreign Affairs and Trade found as many as one in two Aussie travellers believe the Australian government will pick up the tab for their overseas medical expenses. In fact, nothing could be further from the truth.

DFAT’s SmartTraveller website makes it very clear that if you don’t have travel insurance in place, the Australian government won't pay for your medical treatment overseas or medical evacuation to Australia.

So, a sensible rule of thumb is that if you can’t afford travel insurance, you can’t afford to travel.

Fortunately, travel insurance is very reasonably priced. The main thing is to organise travel cover as soon as you’ve paid for flights or accommodation.   

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.