4 tips to insure your college student and save money
By Brandon Ballenger/MoneyTalksNews
Between admissions, financial aid, back-to-school shopping and moving in, it's easy for families of the college-bound to overlook something critical: Insurance.
The average student loan debt in 2013 was $27,000, according to the Federal Reserve Bank of New York. The last thing a student, or their parents, needs is to add to that burden with losses from serious illness, a car wreck, or stolen property.
It's not smart to assume your student will be covered by existing policies, especially if they're leaving home.
Read on to find out what you need, and where you can save money.
1. Car insurance
If your student leaves their car to gather dust at home while they're at college, and the campus is at least 100 miles away, they might qualify for a "distant student" discount. Call your company and ask, and also make sure your student will remain covered as an occasional driver on trips home.
There might also be a separate discount for good grades. The rules and size of these discounts vary by insurer and state, but a good-student discount, usually for a B average or better, is worth 10 percent to 15 percent, according to CarInsurance.com.
There could also be cost implications for cars on campus. For example, attending college in a state that requires higher coverage levels can raise premiums, and so can moving a car from a rural to an urban setting.
In short, when it comes to cars and college, you need to check with your insurer. (If you're shopping for a car, buying one of these top-rated cars for young drivers can help keep the rate down. And there are lots of ways to save on car insurance that have nothing to do with college.)
2. Health insurance
A full-time student may be covered by your health plan until age 26, regardless of where they live, if they're married, and whether they are financially dependent on you, thanks to changes from the Patient Protection and Affordable Care Act (aka Obamacare).
But if you're confined to a group or network plan, your student will still have to find a participating doctor near campus.
If you choose a separate college health plan, Obamacare means better coverage. Both yearly limits and lifetime limits on a student's coverage for "essential health benefits" have been eliminated under the ACA, according to the American College Health Association. (The FAQ on the association's site includes a list of these benefits). In addition to wellness and preventative services, this includes emergency care, hospitalization, mental health and substance-abuse help and prescription medicines. Also, insurance must pay to treat pre-existing conditions and not charge extra for it.
Finally, vaccinations are often a requirement for college admission. If your student is younger than 18, save the cost of a doctor's visit by getting the shot at your county health department, where student vaccinations usually are given for free or cheaply.
3. Property insurance
Students these days have a lot of valuable electronics: Laptops, smartphones, iPads, Blu-Ray players, flat-screen TVs, gaming consoles and so on. And college campuses aren't immune to fire, burglary and other tribulations.
If your student is dorm-bound, your homeowner's policy likely covers their stuff, but you should check and also ask about policy limits. Living off-campus in an apartment? That may call for renters insurance. The good news: It may be less expensive than you think, running around $12 to $30 a month, with $50,000 of coverage for around $159 annually, for example. Be sure to shop around for the best price and, if it still seems too expensive, lower the monthly cost by raising the deductible.
Call your company and ask if you can get a discounted rate for having multiple policies. And then, with help from your student, take an inventory of everything you own by photographing it or making a video so you'll have a record in case you need to make a claim.
4. Tuition insurance?
If your student can't finish a semester because of illness or injury, you could be out a lot of money. In-state tuition and fees cost $9,139, on average, and room and board $9,804 for the 2014-15 school year; average total charges are $32,762 for out-of-state students, according to The College Board.
Tuition insurance is designed to reimburse those expenses. It costs about $200 to $600 a year, according to Consumer Reports, which estimates the average total cost of college tuition, fees, and room and board at a four-year school at $41,000 this year.
Is it a good idea? Consumer Reports points out that coverage usually only kicks in if withdrawal from school was caused by a serious health issue. Otherwise, a policy probably wouldn't pay. And, as with many specialty insurance policies, these are often short on coverage and long on exclusions. Deductibles can be high, too.
"Depending on when you withdraw, the school's own refund policy may already give you a significant chunk of change," Consumer Reports says.
Whether these policies are worth it depends on the cost, the hardship that could arise and your aversion to risk.
Bottom line? Insurance is as important on campus as it is everywhere else. Rather than looking at it as a hassle, consider it a learning opportunity. While that student is waiting to hit the books, have them hit the phone and web and check out this stuff themselves. It's a life lesson that will come in handy before, during and after college.