How Travel Insurance Works

If I spend $125.00 on travel insurance and I have an accident that incurs $500,000 in medical bills will the travel insurance company pay the medical bill?

As long as your policy covers that amount they will pay the medical bills.  Every policy has different limits and that is why it is very important that you understand the policy options that you purchase.  Every trip is different and you may purchase a policy that will cover exactly what you need for that trip.  If you have special needs such as a pre-existing medical condition or expensive items you will be taking on your travel then call the insurance company and they should be able to accommodate your needs.