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Should You Buy College Tuition Insurance?


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August 08, 2021

Should You Buy College Tuition Insurance?

With two of my children heading back to college, something new popped up in the tuition payment section when the bills came online to pay for the 2021 fall semester. There was the normal tuition, fees, and dining dollars on the bill, but then there was a new section asking me about purchasing college tuition insurance for the semester. College tuition insurance? Over the years, I've seen extended warranties, travel insurance, and various forms of product protection but this was the first time I've ever come across college tuition insurance. What is college tuition insurance and do you need it, given the recent rise of the Delta variant and the potential that college campuses could shut down again like they did last year?

Tuition insurance, which pays out if you need to leave school for injury, illness, mental health, and temporarily COVID-19, can be worth the cost if your college does not have a sufficient refund or medical withdrawal policy.

Schools typically have guidelines around who is eligible for a refund and under which circumstances, but those rules can be hard to find and are often ambiguous. Have you ever asked your college or university what the refund policy is if you cannot finish a semester?

Let's say we run across another situation where unfortunately your child contracts COVID-19 and cannot finish the semester. Will the college refund your tuition, room, and board? Some colleges do allow students to withdraw for medical reasons and finish their coursework after they recover for no additional charge. I've also noticed that some schools have openly stated that if they need to shut down, they will refund 100% of all costs, but many universities and colleges have either said no or been completely non-committal at this point. Before buying tuition insurance, verify your school's refund and medical withdrawal policies.

Tuition insurance costs can vary depending on school costs, but plans are often available for under $200 per semester. This will greatly depend on the overall cost of your college or university. College tuition insurance is generally lower (about 1% of college costs) if your school provides its own tuition insurance or partners with a third-party provider like GradGuard, which partners with more than 400 colleges and universities. Expect higher insurance costs (about 2% of costs) if you purchase insurance directly from a third party.

Like any insurance policy it is important to read the details of the policy to make sure the coverage and terms are adequate for your family. It is often the fine print of these policies where you can get trapped and not all policies offer the same coverage levels. GradGuard is particularly interesting now because they made this update for COVID-19 recently on their website:

SPECIAL PLAN ACCOMMODATION FOR COVID-19 Claims due to known, foreseeable, or expected events, epidemics, cessation of operations by the school, or fear of attending school are generally not covered. However, until further notice, although not covered under most plans, we are currently accommodating claims for when an insured student completely withdraws from school for the covered term due to becoming ill with COVID-19. The accommodation above is strictly applicable to COVID-19. All other terms, conditions, and exclusions of the plan apply as normal.

People are always questioning whether the cost of insurance is worth the cost. Remember, college is not just a cost but an investment you are making in your children's future. You should look at these policies closely and ask yourself if peace of mind in those "what if" situations justifies the cost.

If you would like to receive more information on making smart money moves for your future, be sure to contact us today!


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About the author

Ted Jenkin in a suit and tie

Ted Jenkin

CEO and co-Founder


My friends and family all think I'm a workaholic, but I say I'm just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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