Ahh the joys of college: the whirlwind of new friends, late night food, a plethora of you-had-to-be-there moments, sprinkled with studying and making your parents proud of your hard-earned degree. You can’t imagine why anyone would ever leave; those tears at graduation were shed because it just dawned on you that “real life” is just a hop and a skip away.
But what if you had to leave midway through a semester or quarter? What do you do? How do you recover the cost of tuition you or your parents have paid? A.W.G. Dewar Inc., a unit of the OneBeacon Insurance Group, was thinking about this way back in 1930, when tuition refund insurance was established to recover costs incurred by homesick children.
Tuition insurance helps recover some or all of the financial loss related to involuntary withdrawal from an institution due to medical reasons, death, or the death of the student’s legal guardians. It may also cover student loans or payments the student may owe to the educational institution.
What Doesn’t It Cover?
Some tuition insurance plans may have a pre-existing condition exclusion for 6-12 months. Tuition insurance may or may not exclude mental illness, involuntary job loss, relocation, voluntary withdrawals, dismissal or suspensions. In these instances if there is coverage, it may only be a percentage of coverage. For example, mental illness usually has 60-75% coverage with insurers.
Withdrawals due to skipped classes, drug use, self-inflicted injury, war or warlike activity or a catastrophic event causing the closure of the school are not covered. Some policies even have an exclusion for early graduation, so you should be sure to read the fine print.
Is It Right For You?
The average college student is young and healthy and simply does not need tuition insurance. But not everyone is the average college student and some things we simply cannot foresee. So here are a few things to consider:
- Pre-Existing Illness—Do not let the exclusion of some plans lead you to avoid getting tuition insurance if you have a serious illness that may force you to withdraw from school. For those policies that do have the exclusion, remember that some of them waive the exclusion after 6-12 months of coverage; after meeting that condition, you should be covered 100% under the premise of a medically necessary withdrawal. Otherwise, just know that not all plans exclude pre-existing illness and you may just have to do a bit more shopping for the right policy.
- Worried About Death or Serious Injury?—A life or disability policy is probably the better option for both students and parents. You can acquire additional coverage to cover college or other educational costs in your policy.
- Consider the Costs—Sallie Mae provides tuition insurance with a $164 premium for maximum coverage of $5,000-$10,000. Keep in mind some college tuitions are as high as $60,000. Even if your tuition isn’t that high, just make sure you really take the time to consider the cost of coverage.
If you’ve decided that tuition insurance is an absolute must, it can be purchased at any time during the academic year. First, check your school’s tuition refund policy and tuition insurance program. If your school doesn’t provide any, simply apply to tuition insurance companies such as those provided by A.W.G. Dewar, Inc.
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