Trying to read through the fine print of travel insurance policies can be difficult, at best. How do you know the difference between the different types of policies? How do you determine which one do you need? Does a cancellation plan offer medical benefits? And do you need to consider an annual plan if you only leave the country twice a year?

The Centers for Disease Control recommends purchasing a travel insurance policy when you travel overseas, based on where you're going and what you might be involved in once there. At the core, travel insurance policies usually come in one of three varieties: trip cancellation, travel medical, and medical evacuation insurance.

Which travel insurance policy is right for you? Consider the following when considering the best one for your needs:

Trip Cancellation Insurance

Trip cancellation insurance covers exactly what the name implies: an involuntarily, forced cancellation of your travels. Many of your trips costs may be recovered with trip cancellation insurance, including common carrier ticket costs (such as airfare, train tickets, bus tickets, and even cruise fares), costs associated with going on an organized tour, and any cancellation fees you may run into. Keep in mind that not all trip cancellation policies are made equal: some cover more situations that would cause you to cancel your trip than others. Additionally, in order to take advantage of this benefit, your trip would need to be cancelled for a covered reason. If you want the freedom to be able to recover your costs at will, then you'll want to purchase a "Cancel for Any Reason" policy. 

Travel Health Insurance

Again,like the name implies, travel health insurance is a special, short term policy that covers your health and wellness while you travel abroad.

Your regular health policy may not cover you while you travel abroad - and more importantly, a hospital or health care provider in another country may not recognize your health insurance as valid. A travel health insurance plan can help you in the event you get ill or injured while abroad, and even guarantee payment. When considering this type of plan, be sure to ask about the pre-existing waiver exclusion period, as well as any other exclusions that might be hidden in the policy. While travel health insurance plans may include some trip cancellation benefits, it's primary purpose is to provide coverage for your health and well being. 

Medical Evacuation Insurance

In the event that you are injured while traveling abroad, do you know how you would get home? A major hospitalization might require an evacuation using an air ambulance - which can cost $30,000 or more. Medical evacuation insurance can cover the costs of an air ambulance to get home, should you require medical transportation back to your home country. Depending on a number of factors (including age), medical evacuation insurance can be an inexpensive policy that can save you money if you get hurt. And in some cases, medical evacuation insurance may be covered in your trip cancellation or travel health insurance plans. Be sure to ask if this is included in your travel insurance policy.

Knowing the major differences between the three main types of travel insurance can help you pick the right policy when you get ready to go abroad. And with a little planning today, you can save yourself a lot of potential trouble in the worst case scenario.