Don't forget insurance with college-bound kids
Friday, August 24, 2012
CHICAGO (AP) — It's inevitable that something will be forgotten in the excitement of sending a child off to college.
Tuition bill paid?
Insurance taken care of?
Insurance needs are often overlooked in the last-minute scramble. But relying on existing coverage — or a lack of it — can end up costing families during the college years and perhaps beyond.
Parents don't need to buy all kinds of additional insurance as they pack the kid off to college. But they had better at least review their coverage to know whether they're prepared for that stolen iPad, trip to the emergency room or worse.
A look at key considerations for different types of insurance:
Many colleges and universities require health insurance. Most parents can meet that by keeping their children on their plan, which federal health reform allows until age 26.
If the college is in another state, it's important to check your plan's network of preferred doctors and hospitals extends there. Otherwise the highest level of coverage may not be available.
School-sponsored health plans usually cost hundreds of dollars per semester. Many also place dollar caps on coverage, as well as require that most care be provided through the student medical center. These options are best-suited for the many students whose parents don't have health insurance.
An alternative would be an individual health insurance plan. A student should be able to obtain a policy that costs no more than $150 a month. Check prices at Internet-based insurance provider eHealthInsurance.com or StudentHealthPlan.com.
Car insurance is an area where families can actually save money.
Premiums may be reduced by 10 percent to 20 percent if the student attends a college more than 100 miles away and doesn't take a car. And, car on campus or not, some insurers also offer a "good student discount" for those who maintain a B average or higher.
Even if they might not qualify for either discount, parents should inform their insurance company that a student on the policy will be relocating. It's good to keep insurers in the loop on such moves. Depending on where the college is, the cost could go up or down.
It's not unusual for students to have thousands of dollars of electronic gadgets and other belongings in their dorm rooms, from laptops and videogame systems to bicycles and musical instruments. And they are popular targets for theft.
Such items typically are covered by the parents' homeowners or renters insurance if stolen — minus the deductible, of course. But coverage varies, so inquire about any policy limits.
Taking a photograph of each expensive possession can help ensure receipt of its proper replacement value if it's stolen.
To protect against items being lost, or for extra coverage with a lower deductible, renters insurance is available for usually around $150 to $200 a year. Deductibles can be as low as $50 or $100.
Anyone living off-campus will need to get a separate renters insurance policy to cover personal belongings, as will each roommate.
Tuition refund insurance is a means of getting your money back if the student withdraws from college — generally only for documented medical reasons or due to the death of the student, parent or guardian.
Much of what it provides is peace of mind. "It's not something that you really need, and it's relatively expensive," says Mark Kantrowitz, founder of the financial aid site FinAid.org.
But parents may want to think about buying it if they're paying all the costs at an expensive school without financial aid, or if the child has a serious medical condition.
"We encourage tuition insurance because students are not invincible," says Kurt Holmes, dean of students at The College of Wooster in Ohio. "Every year, medical situations as simple as mono or an appendectomy arise that cause students to lose a semester."
First, look into the college's refund policies and tuition insurance plan.
Another option is to get coverage through Sallie Mae. The nation's largest student lender, which provides $5,000 of annual tuition protection to borrowers, also sells the insurance separately. For example, $20,000 of tuition coverage costs $359 a year.
Buying life insurance for a college kid might sound overly cautious, if not macabre. But it can make sense for parents who co-sign for tens of thousands in private student loans. Without it, they may owe the amount they co-signed for if their child dies. Some lenders, but not all, will forgive loans for co-signers if the student dies or is permanently disabled. Be sure to ask your lender first.
It's possible to get a $100,000 term life insurance policy for a student for less than $100 a year. That's a bargain price to pay to avoid the risk of years of hefty monthly payments if tragedy strikes.
Travel insurance can help cover costs of a semester abroad marred or lost because of illness, accident, theft or other setbacks. Insurers reimburse for many travel-related emergencies, although exclusions vary widely. Some offer trip cancellation protection for any reason. Check with the college first, and carefully read the fine print of any policy.
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