Yes, travel health insurance is usually that cheap (at least in Europe/Germany). Most policies are valid for one year after you take them, and renew after each year.
You can cancel it after the first year, but given the low price for this essential insurance, it makes often sense to just keep it.
What to look out for
People here won't read all those policies for you. You'll have to check the terms on your own and see what works for you - or you can check if some consumer group in your country did a comparison.
Some things you can you look out for in general:
- Do they cover the country that you're going to?
- What is the maximum trip duration that is covered?
- Do they cover the cost of airlifting you back home, if needed?
- Will they pay for search&rescue, if necessary?
- Is there a deductible, or a limit of their coverage?
- Do they exclude any "high-risk" activities, or sports injuries in general?
- Do they include any pre-existing conditions, or do they have a list of conditions that are not covered?
- Do they refuse payment under any circustances (e.g. in case of war, or if there was a government travel advisory for that country?)
- Do they have an emergency number that you can call around the clock?
How does it work?
How easy it is to get services depends on the country you're in, and the facilities that you use. Your travel insurance can't really change the level of medical care in the country that you're in; although they may have a hotline that may offer some assistance in finding a doctor. That's why it is important that they cover transport back home if needed.
The insurance may also not be able to directly deal with all doctors or facilities, at which point you may have to pay on your own and later claim the money back from the insurance.
You don't usually have to call first before getting treatment. However, for anything more than minor problems it makes sense to get in touch and work with them to do things "right", and also to arrange payment for things you can't cover by yourself.
You should always collect all documentation and make your claim as soon as possible in any case.
Finally, if you have specific questions, there's an easy solution: Just ask. Email the company and ask if they cover x and y, and if the can confirm that to you in writing, before you take the contract.
Don't let them upsell you, though. Insurances would rather like you to take out a much more expensive "package" with baggage insurance, cancellation insurance and whatnot. Just stick with the things you really need.
Be careful with insurance options included in credit cards. They often have more limitations than a good "normal" insurance.