Is Tuition Insurance Worth It?

By Kailey Walters on September 29, 2019

College is a huge investment — mentally, emotionally, and of course, financially. With the rising costs of college expenses, it can be a little daunting sometimes to think about how you and/or your parents will protect such a large investment in your education.

While financial and merit aid, such as scholarships and grants, can help you pay for college tuition and other expenses, tuition insurance is what helps you protect your financial investment. Just like anything else, the decision to go with tuition insurance is a significant one — which means you should weigh the pros and cons of getting it.

What is tuition insurance?

Just like any other insurance, be it car, life, or homeowners insurance, tuition insurance (also known as tuition refund insurance) provides coverage in the case of an accident, emergency, or unforeseen circumstance; in this situation, it provides security if you need to withdraw from college, usually because of medical or mental health reasons. So, if you find you can no longer continue in school for the time being, a tuition insurance plan will allow you to be reimbursed for your college expenses.

How does tuition insurance work?

Before you decide whether tuition insurance is right for you or not, you should make sure to do your research and figure out how it works exactly. After all, when it comes to such a big decision, you want to have all your bases covered.

An important question to address is how much of your college expenses the insurance will cover. While some insurance plans will cover all of the costs, other plans might reimburse only 75 to 90 percent of your total expenses. This is definitely worth keeping in mind.

Another important thing to know is that, in case something does happen and you need to collect on the insurance, you must provide documentation of all claimed expenses as well as a doctor’s recommendation that you can withdraw from school. That being said, you should definitely keep a thorough record of all your college expenses — including tuition and other school-related costs — so no problems arise if you need the insurance plan to kick in.

And of course, in general, it’s crucial that you pay attention to the fine print of any tuition insurance policy that you might be considering. Some plans may differ in terms of what they cover and how they work, so make sure to do your homework so that nothing takes you by surprise.

infographic, tuition, tuition insurance

What does tuition insurance cover?

One of the biggest questions you probably have is: What is covered by tuition insurance? Coverage may vary depending on the plan you choose, but generally, it covers only certain qualifications:

  • a medical disability (such as an illness or injury)

  • mental or psychological disorders (such as anxiety or severe depression)

  • a student’s death (or the death of the primary tuition payer)

  • some other unexpected reason.

If you end up qualifying for one of these reasons, you can be covered by a tuition insurance plan. However, if you simply decide to drop out of college — say, if you no longer wish to continue your studies for reasons unrelated to those mentioned above — then you will not be covered by a tuition insurance policy.

It’s also worth noting that, in many cases, tuition reimbursement for a mental health reason will not pay as much as for a physical injury or illness.

What does tuition insurance not cover?

What’s just as important as knowing what tuition insurance covers is knowing what it doesn’t cover. As briefly mentioned previously, insurance does not cover anything that is outside the categories of a medical disability/illness or physical injury, a mental or psychological condition, or death. So anything along the lines of poor grades, illegal drug or alcohol use, or homesickness — just to name a few examples — would not be covered under a tuition insurance plan.

Do you already have coverage?

A huge factor in considering if tuition insurance is worth the money for you is whether or not your college already offers some sort of refund policy. While some colleges don’t, others might have policies that refund you at least some of your tuition and potentially other school-related expenses. It might be well worth the time and effort to do some research and figure out what kind of tuition insurance plan your college or university offers if any. Depending on your own financial and medical background and how much your school would be able to refund you, you can make a decision as to whether purchasing additional tuition insurance would be beneficial.

How much does tuition insurance cost?

One significant factor that might hold some people back from getting tuition insurance is its cost. After all, if you haven’t heard of it before or know much about it, you probably assume it’s just another expense on top of all the other costs you have to worry about for school.

In some cases, depending on your financial situation and the cost of the particular policy you’re looking at, tuition insurance very well could be just another expense that you would rather not deal with. However, tuition insurance plans aren’t usually outrageously expensive. According to The College Investor, tuition insurance costs about 1 percent of the total tuition amount, on average. For example, if you have a standard semester-long tuition protection plan for $20,000, then you would be paying $198 for the insurance. As a result, the cost is just one factor that could play into your decision as to whether or not tuition insurance is worth it.

Where can you find access to tuition insurance?

There are a number of companies that offer different tuition insurance plans that you could take advantage of.

One is GradGuard, which is partnered with Allianz Global Assistance and offers two types of insurance: renters insurance and tuition insurance. Its tuition insurance covers serious injury or illness (such as mononucleosis or a severe head injury), psychological conditions (such as stress, depression, or severe anxiety), and chronic illness (such as auto-immune disorder or diabetes). GradGuard is a fantastic and reliable option for many students, as some of its policies include a 100 percent reimbursement for not only tuition but also for other expenses including room and board and other fees. GradGuard also provides coverage at hundreds of colleges and universities nationally, making it easily accessible.

Another reliable option is A.W.G Dewar, which offers tuition insurance for K-12 private schools as well as colleges and universities. Dewar’s Tuition Refund Plan allows families to protect their tuition investments by refunding part of students’ unused annual tuition and insured fees if students are withdrawn from school. Around since 1930, Dewar now has become quite established, with more than 1,200 schools and colleges relying on its insurance protection.

money, tuition, checkbook

pexels.com

Is tuition insurance a good fit for you?

After considering all the factors involved in purchasing a tuition insurance plan, you’re probably wondering if tuition insurance is a good fit for you personally. Of course, tuition insurance is not one size fits all. Its value to you depends on your individual medical and psychological background, your (and/or your family’s) financial status, the school you attend, and a number of other factors.

There are primarily two situations in which you would benefit from having tuition insurance. One is if you are chronically ill. After all, illnesses can often be unpredictable, which means you never know when you’ll unexpectedly have to take time off from school in order to recover. Having a tuition insurance plan would afford you peace of mind, knowing that if you do ever need to take time off, you will be covered and refunded your expenses — which is a huge relief, considering just how costly any college education can be.

That leads to the other situation in which you would benefit from tuition insurance: if you attend a costly school. If your family is shelling out thousands of dollars (sometimes even hundreds of thousands of dollars) for you to attend a certain university, you definitely want to protect your investment. A reliable tuition insurance plan can protect you in case something unexpected or catastrophic happens that prevents you from continuing the semester or further time in school for the foreseeable future.

However, in many other cases, tuition insurance is not worth the cost because it doesn’t provide good financial return. If you are generally a physically and psychologically healthy individual, chances are that you won’t need to suddenly discontinue your time in school. Also, if you attend a relatively inexpensive university, you may not need a tuition insurance plan to protect your investment, as the cost of the insurance might just end up being an extra expense for you to handle at the end of the year.

How do you apply for tuition insurance?

If you decide that tuition insurance is going to be valuable to you, it’s not difficult applying for it. The process involves simply deciding the coverage term and amount you want, entering your personal information, and choosing the policy you prefer. After you’ve paid for your insurance policy, it will go into effect for the duration of the semester or period of time you indicated on your application.

What are some other ways you can protect your college investment?

classroom, school, college

pexels.com

A tuition insurance plan from an outside source or company is not the only way to go. Many colleges and universities offer some kind of tuition refund policy that should cover at least some portion of your expenses. As a result, looking into your specific school’s policy could be well worth the time and effort.

Another option is to go with life insurance instead, especially if you have a relatively serious medical condition. As life insurance is much more comprehensive and secure than tuition insurance, you’ll be sure to have peace of mind.

Summary: factors you should consider in purchasing a tuition insurance plan

In summary, there are a number of different factors you should consider when weighing the pros and cons of getting tuition insurance.

Cost

Cost is definitely one significant factor to consider. If you are leaning towards getting tuition insurance, rest assured that it is generally less expensive compared to other types of insurance. For instance, if your tuition is around $50,000, you might only be spending a few hundred dollars.

What’s being covered

Knowing exactly what is being covered by a specific policy is of utmost importance. You wouldn’t want to spend money on insurance only to find out that you don’t qualify for a refund.

Your needs

Knowing if you qualify is also crucial to whether or not you would benefit from tuition insurance. As mentioned above, be familiar with what is covered and decide if it would be worth it for you personally, based on your own needs, including your medical, mental/psychological, and financial background.

Withdrawal period

If you do need to withdraw from school, the time at which you withdraw is important to note. For example, if you withdraw within the first few weeks of the semester, you may be covered already by your school’s policy. That being said, become familiar with your school’s refund policy and decide whether the timing would allow you to benefit from tuition insurance.
Coverage period

In many cases, the insurance policy may only cover the current semester — which means you need to decide if that particular window of time is worth it for you.

Ultimately, the decision on tuition insurance depends on you — your concerns, your needs, and your background. Make sure to properly weigh the pros and cons so that you can make an informed decision that works best for you and your family. Either way, you should be able to feel at peace and secure with whatever decision you arrive at, knowing that you can decide what you want to invest in.

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