As the bell rings on another school year, a host of insurance topics are showing up for class.
From tuition insurance to life, health, auto or renter’s insurance, parents and their students should get ready for the potential risks and insurance opportunities a school year has in store.
After a school year begins, families only have a very short and very defined window in which they can pull their student and ask for a full refund on tuition. If an emergency happens outside of that window, families are going to be left owing at least some of that bill.
That is where tuition insurance comes in. Tuition insurance protects families from emergencies that pop up that prevent the student from completing their semester. Typical tuition insurance policies protect students from a sudden serious injury or illness, a chronic illness, death of the student or tuition payer or a mental health emergency.
Typically, these policies refund some or all of the tuition, room and board costs if the student is unable to complete their term. Some even help the student return home and return their vehicle home in the case of an emergency.
It is important for families to know, however, that the triggers for payment have to be verifiable and outside their control. Simply losing steam and choosing to withdraw is typically not covered, though families may be able to find broader coverage with certain policies.
These policies are available for universities but also for some private K-12 schools, as well.
College students may not be the typical audiences for a life insurance pitch, but two factors have changed that reality – parenthood and student loans. If the student has children of their own, then the typical life insurance conversation would be in play. What would happen to that child if the student dies? And when it comes to student loans, even a childless student may think about a term life insurance policy.
Traditional federally issued student loans taken in the student’s name — subsidized, unsubsidized and even Parent PLUS – get discharged if they die, so those aren’t the ones in play here. Private loans get more complicated.
When it comes to private loans, there are no universal standards for what happens if the student dies, so if that loan does not discharge on death, there is a great case to be made that an inexpensive term life policy makes sense for the student until that loan is paid off, especially if someone – such as a parent – is the one who is signing or cosigning for that loan.
Most colleges require students to show that they are covered by a health policy as a condition of enrollment. And most colleges also partner with a campus health insurance provider for students who don’t have suitable coverage and add those policies onto the tuition bill.
While those campus-issued policies do make sense for many students, they shouldn’t be the automatic solution for everyone. If the student is covered by their parent’s private health policy, the first thing to do is look for coverage networks. If the policy has providers available near the school, then that might be all they need, and they should petition the school to drop that automatically issued coverage.
Even if the typical preferred provider network doesn’t cover the area around the school, some private policies allow parents to buy out-of-network coverage option that might be worthwhile if it means not having to buy a separate plan.
If the parents have a Marketplace Plan, then it is essential to double check the preferred provider network because, in most cases, they won’t cover out of state providers. In this case, it may make sense for the student to also apply for their own Marketplace Plan in their new state.
The parents’ and the student’s incomes will both be counted toward both Marketplace policies for the purposes of calculating any subsidy, so there isn’t a rule of thumb for everyone on whether this option makes the most sense.
The bottom line is to ensure that the student has access to the providers they need, and then look at what it is going to cost to ensure they are properly covered.
In the case of K-12, if the parents are uninsured, they need to know the options available through the state Child Health Insurance Program, which may offer low- or no-cost insurance for their pupils.
See also: How to Help Children Deal With Trauma
When it comes to auto insurance for a student, the most important question to ask is “where is the car?” according to the guidelines covered in insuranceQuotes.com’s 2022 Back to School & Insurance Report.
If the student brings the car to school, they should let the insurer know where it is going to be parked. The new community may require higher rates, and those may depend on whether the vehicle is in a secured parking garage or out on the street.
If the student leaves the vehicle at home, the insurer also needs to know, because if the student is away at school more than 100 miles from home, they may qualify for a discount because the car is going to sit idle for much of the year.
In some rare cases, such as if the parents lived in a high-insurance-cost community and the student moved away to a low-cost community, or if the parents have an exceptionally poor driving record, it may make sense for the student to take out a completely separate policy, though those cases are few and far between. It is almost always a better financial deal for the student and parents to be on the same policy.
It is also important for the families to brag about junior’s grades. If the student is on the honor roll, they may qualify for a good student discount.
If the family is tempted to drop coverage altogether, it is essential that they know that it would be strictly forbidden for the student to drive when they come home.
Protecting the student’s belongings while they are away is the role of homeowner’s or renter’s insurance.
If the student is living in the dorm, their parents’ homeowner’s insurance may be sufficient, though deductibles and policy limits may cut into the usefulness. Typically, each policy limits how much property is covered when it is not within the premises of the parents’ home, so the student may be limited to $10,000 in coverage when they are off to school.
On top of that, if the parents have a $1,000 deductible, then, even if the student’s dropped mobile phone would otherwise be covered, there wouldn’t be much coverage left after the deductible is paid.
If a student moves off campus, the homeowner’s question is a moot point. Nothing would be covered by a parents’ policy if the student was living in their own apartment (rather than a dorm.)
This is where a renter’s policy would make sense. Because the policies don’t cover the structure, they tend to be very reasonably priced, and they can carry a much lower deductible, meaning that broken cell phone may be covered after all.
But just like with homeowner’s policies, floods and earthquakes are excluded by typical policies.