We insure our cars, our houses, and sometimes even our pets. So, why not insure tuition? For a few hundred dollars, parents can purchase insurance for their child’s tuition in the event they drop of out college for medical reasons. With parents gawking at the semester’s $25,000 tuition bill, it’s no wonder some are considering tuition insurance. It has other parents, however, wondering if those extra hundred dollars are worth it, considering that bank-breaking tuition money they are already struggling to come up with.
The largest tuition insurance provider, A.W.G. Dewar, a unit of OneBeacon Insurance Group Ltd., said that insuring a child’s education is a solid investment. Providing plans for more than 1,000 of the U.S.’s priciest, private schools and elite colleges, Dewar often sends out insurance brochures to families when it comes time for parents to pay for tuition.
It’s unlikely, however, that one of these policies will do a parent any good. New York University reports that 10 to 20 claims are made a year, which is less than 2 percent of those insured, while the University of Southern California says that less than 1 percent of those who buy tuition insurance, about 50 to 60 claims a year, actually benefit from their policy.
These policies offer full coverage, but only under the right circumstances. For medical reasons, such as a bad car wreck or a debilitating case of mononucleosis, the insurance will reimburse parents 100 percent of the tuition paid, but will only cover 60 to 75 percent if students leave for mental-health problems. Self-inflicted wounds and drug addiction are not covered. The policy may also exclude preexisting conditions and mental-health issues that would only land a student in the hospital for a couple of days.
Robert Hunter, director of insurance at the Consumer Federation of America said that parents should ask themselves if tuition insurance is worth the money for their own specific circumstances. What are you afraid of happening to your child? Would it be a huge financial strain for you to pay the insurance? Hunter said everyone should ask these types of questions whenever purchasing insurance.
“I don’t think it’s a great economic value,” Hunter said, “but if you are so worried about it that you’re not sleeping at night, you should get it.”
Via The Wall Street Journal
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