Definition:
Tuition insurance is a financial product that covers the cost of a person’s study period if they are unable to complete their studies due to medical reasons or life changes. The insurance company or your school may pay the entire tuition, including housing and food, or sometimes only part of it.
How does tuition insurance work?
Tuition insurance covers tuition costs if the student is unable to complete their education due to illness or injury.
The cost of tuition at public and private colleges and universities averages between 55.2% to 65.8% annually. Additionally, only 6% of the universities and colleges in the United States surveyed by GradGuard (which is a tuition insurance policy offered by Allianz Global Assistance) provide a full refund to students who withdraw for qualifying medical reasons.
If your school does not have a sufficient medical withdrawal or refund policy, this financial system can help alleviate the financial burden in cases of illness or injury.
You can purchase tuition insurance from an insurance company, but the school may also offer this type of coverage. Some schools provide this type of coverage as part of the parent tuition fee package. Parents and students should know the cost of tuition insurance and what it covers before deciding whether to purchase this type of coverage.
Most colleges and universities will not refund 100% of the costs and fees due, so buying a separate insurance plan may be the ideal option to fill this gap. The amount refunded correlates with the level of coverage purchased.
Some plans can reimburse you up to 100% of your total costs, but not every plan or company does that. Be sure to read the fine print and understand what is covered by your insurance policy.
Types of events covered by tuition insurance
There are various options for tuition reimbursement insurance, including the entity from which you wish to purchase the plan. This applies whether for the tuition refund coverage your university or college offers, or purchasing it directly from a private third-party company, such as GradGuard, or a tuition reimbursement plan like those offered by the insurance agency A.W.G. Dewar.
Tuition refund policies at universities and colleges typically cover tuition fees, but usually do not cover housing, food, or academic fees. Moreover, this coverage may only apply for a specific period, often for four weeks at the beginning of the semester.
If you want full coverage, the “total cost of attendance” insurance policy will reimburse you for everything but may be more expensive. Typically, a “doctor-approved leave” will be required to receive a refund.
Note: If you or your child is living away from home to study, consider additional renters’ insurance or housing insurance, along with life insurance, tuition reimbursement, and health insurance. This additional coverage can protect your property and living situation from damage or theft.
Examples of covered events and common exclusions
Here are some events or emergencies that your tuition insurance policy is likely to cover:
- Accidents or injuries
- Chronic illnesses
- Non-elective surgeries
- Some mental health conditions
- Death of the student or immediate family member
Common exclusions in policies include:
- Relocation
- Withdrawal
- Loss of desire to continue studying
- Cosmetic or elective surgeries
- COVID-19 coverage perhaps
- Injuries sustained while committing a crime
- Shifting classes to virtual attendance
Note: Filing a false claim to receive compensation from a tuition insurance policy is considered insurance fraud, which is a federal crime. Fraud in the United States is a misdemeanor or felony (depending on the amount and the state you reside in), which could mean time in prison. Only file a claim if you are eligible and in need of it, and do not exaggerate your claim.
How much
What is Tuition Insurance?
If you are unable to attend classes due to illness, injury, or another qualifying reason, tuition insurance can cover the cost of your tuition and associated fees related to that event. At schools that partner with an insurance company, the coverage cost is typically 1% of the tuition cost. For schools that do not partner with an insurance company, you can purchase a plan on your own. These tuition refund plans must be purchased at any time before the first day of classes.
Note: Tuition refund plans should be purchased before the semester starts. Set up a financial plan for college in advance, mark important dates on your calendar, and don’t miss the deadlines.
You can file a claim until the last day of the semester. Coverage ratios and payout amounts may vary based on several factors, including the number of days you were absent that semester, the negative event, and your insurance company’s policies.
Pros and Cons of Tuition Insurance
The biggest benefit of this type of student insurance is peace of mind. It is invaluable to know that regardless of any unexpected illness or injury that may occur, you will be able to help yourself or the student complete their studies with minimal financial burden. However, there are some disadvantages to consider.
Advantages:
- Affordable prices
- No time limits on coverage
- No deductible
- Can cover the entire cost of college attendance
Disadvantages:
- Plans may not cover pre-existing conditions
- Some medical or life events may have low compensation
- There are qualification deadlines
- May not cover epidemics and pandemics
Note: Tuition insurance can come with additional benefits, such as disability coverage, which ensures that your child or you will receive disability payments if you are unable to work due to an accident or illness.
How to Obtain Tuition Insurance
The first step in applying for this type of insurance is to find an insurance policy provider. Check with your school to see if they already offer this type of coverage (usually bundled into tuition costs) through a partner company. If not, you can apply for coverage with a private company.
Qualifications may include proof of enrollment, expected family contribution, information about student loans and financial aid, and medical history.
Frequently Asked Questions
What is tuition refund insurance?
How much does tuition insurance cost?
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Source: https://www.thebalancemoney.com/what-is-tuition-insurance-6889011
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