Re the borders, Jordanian border is the quietest one (taking the honor from the Egyptian & Syrian borders, which now have some potential for danger given the instability there). During the war of 2006 in Israel, land borders with Jordan and Egypt were open and unaffected. Land borders with Syria and Lebanon are only open for the UN personnel and Syrian citizens living in Israel anyway.
Usually, governments take action to evacuate their citizens from hot spots. This happened numerous times before (for example, recently French and Italians evacuated EU citizens from Libya, French evacuated westerners from Syria, Americans and Brits evacuated from Lebanon in 2006,etc etc).
Re refunds, you should read your travel insurance terms, but wars are usually not covered, acts of terror are. So it depends, in an event of an unfortunate occasion, how it is going to be classified. If your travel insurance covers war and hostilities - then you're good to go in any case. My business travel insurance, for example, does (similarly to the terms @Stuart has mentioned in the comment).
I personally have been to Israel numerous times, including during the first Gulf War when they were rocketed by Saddam Hussein every evening. This is something the Israelis are long ago used to, so you might be shocked by the fact that there might be a war 30 miles away, and people are having coffee on the streets living their life as usual.
By the popular request, removed the speculation, but here it is for those who are still interested in my biased and unsolicited opinion:
I doubt anyone will attack anyone any time soon, Israel doesn't usually talk when it wants to shoot. What can happen is an event style 2006, when a pro-Iranian militia attacked Israel from Lebanon and caused a small war. It can be from any of the Israeli borders, but specifically in relation to Iran, it will probably happen from Lebanon or Gaza.