Travel insurance is designed to provide financial compensation for travellers for unexpected or unforeseen events that may happen before, or during their trip. Having to cancel your holiday because you are made redundant, or seeing your bag fly off the top of a bus into a ravine in India are incidents you cannot predict, and so should be covered under a travel insurance policy.
Insurance companies consider a whole host of factors when deciding what to charge for a travel insurance policy.
Going somewhere seen by insurers as relatively safe and low risk will cost less than taking a trip to more exotic location which has recently seen some civil unrest, as there is there is a lower chance they may have to pay out in the safer country. If the Foreign Office has declared your intended destination unsafe to travel to, your insurance policy won't cover you if you do go there. Look at the Foreign Office Travel Advice page to see if your destination is safe to visit.
Similarly, insurers may charge more if you are going somewhere where the cost of medical care is high. Travelling to multiple countries worldwide will also be more expensive than a week away in Spain.
Logically, if you need cover for a longer period, you will be charged more for it. If you are only going away for a three-day city break to Barcelona, there is less chance of something happening that you'll need to claim for, than on a month-long exploration of New Zealand in a camper van.
The premium you will be charged for your travel insurance will also be influenced by the kind of policy you need. If you only need cover for a single trip, this will cost less than an annual multi-trip policy.
A quick business trip to Amsterdam for a board meeting is less of a risk to insurers than insuring someone who is going rock climbing in Austria. The cost of paying for a lost laptop as opposed to a large medical bill is something they will take into account when calculating the premium.
If your policy doesn't cover your planned holiday activities, you may be able to add extra cover to your holiday for an additional cost. Check with the insurance company to see what they can offer you.
It is less likely that you will have to make a claim for medical expenses on a travel insurance policy if you are in good health. It is important that you disclose any pre-existing conditions to your insurer, to determine whether you will be covered under a standard policy or will need to get a policy that specifically covers pre-existing medical conditions.
A specialist policy may be more expensive if the risk of you making a claim could be higher.
Unfortunately, it's a fact of life that as we get older, we become more prone to illness and disease, and so the chance of claiming for a medical incident on a travel insurance policy increases. Insurers take this into account when calculating premiums.