Forget the geo-politics for a second, I am talking money saving here. If you buy an annual travel insurance policy but don't go further afield than Israel, hold your horses - you may not need to plump for worldwide cover.
Many European policies cover some countries way outside the EU, including Morocco, Tunisia, Egypt, Turkey and West Russia, and a few include Israel too. So choosing this option could save hundreds on the cost of a family's insurance premium.
The cheapest annual single policy that extends European cover to include Israel is from insureme4, via Moneysupermarket, for under £17; but double-check your destination is covered before buying, as things can change. For anyone under 65, you could get a standard single European annual policy for as little as £14, though it has £150 excesses. Alternatively it is £28 for couples and families.
More information and best buys for the over-65s are in my full guide at www.moneysavingexpert.com/travelinsurance.