So you have your destinations picked, your vaccinations booked and your bags almost packed. But have you arranged your cheap worldwide travel insurance yet?

Don't fall into the trap of thinking this is a luxury item you can do without. If something awful happens on your holiday, the first place you will want to be is home. A travel policy can make this happen. If you die on your trip, do you really want to put your grieving loved ones under the additional stress of trying to find the funds to bring your remains back?

Think of your insurance policy as a very good friend who will be there if things go wrong. You don't go on holiday expecting trouble but you cannot predict a weather catastrophe such as the Tsunami in Asia, or an unexpected terrorist attack in Egypt. Even something simple like your bags not reaching your destination when you do can turn a fantastic trip into a nightmare.

The insurance company will work out your premium based on a number of factors. They will look at you as an individual i.e. your age, sex and recent medical history. They will also look at the countries you intend to visit. Although you may be going on a worldwide trip, you may have already decided not to visit some places like Iraq, Afghanistan or Columbia. If you exclude these "dangerous" countries, you are less likely to suffer a rating on your policy. Ratings increase the cost so are best avoided.

The company use actuaries to help compute the statistical likelihood of a certain event occurring. As these people do not know for sure what will happen on your trip, they look at all the factors involved. So if you have a history of angina, they may well decide you are more likely to suffer a heart attack abroad then someone of a similar age, height and weight with a clean medical past. They will increase your premium to compensate for this perceived extra risk.

These employees are under pressure to make the insurance company a profit so they need to work out how much money they could afford to pay out on benefits without causing a loss. They will not always get it right but as they have broken their crystal balls, it is the best way for them to compute the premium.

So how do you cut the cost of your travel insurance policy? You should see what cover you already have that you can use while traveling. For example, your medical insurance may protect you when you are abroad. Get the company you use to confirm this in writing. Your life policy may pay out if you or a family member were to die while traveling - again ask for written confirmation.

Your homeowner policy may provide comprehensive theft cover. Does your credit card offer protection for lost luggage? If you find that your existing policies already protect you, this will go a long way towards achieving cheap worldwide travel insurance.