Tuition Insurance

Why buy tuition insurance?

When you’ve ponied up thousands of dollars for a child’s college tuition, it’s natural to worry what would happen if they didn’t finish out the semester. Tuition insurance provides a way to reduce stress about possibly losing a large amount of money if a child can’t finish out the semester.

A college student might drop out for many reasons, from sickness to injury to depression. If it’s past the date for a full or partial refund from the college, parents or other payers can be left holding the bag.

Depending on the insurance company selling tuition insurance, coverage may not be available in all states or not for all colleges, such as for-profit institutions.

What’s reimbursed?

Tuition, room and board, and school fees are generally reimbursed under tuition insurance.

When does tuition insurance pay reimbursement?

Tuition reimbursement insurance usually pays when there is:

• Injury or illness of the student, including mental conditions such as depression or anxiety.
• Death of the student.
• Death of the person paying tuition.

Some policies will also cover “other unforeseen reasons” and cases of involuntary job loss of the person who pays the tuition.

What’s a sickness or injury?

Knowing how the tuition insurance policy defines a sickness or injury is important if you want to make a claim. Check the policy for its definitions. Here are examples of how Liberty Mutual defines them in one of its tuition reimbursement policies, but remember other policies may define them differently:

What’s a sickness? “Sickness” means a physical or mental illness, sickness, or disease, for which symptoms commenced and medical advice or treatment was sought or received after the effective date of a student beneficiary’s period of coverage under the policy and while it remains in force.

What’s an injury? “Injury” means bodily injury or death which is the direct result, independent of all other causes, of an accident. The accident must occur on or after the effective date of the student beneficiary’s period of coverage under this policy and while it remains in force.

What’s an accident? “Accident” means a sudden, unexpected, specific and abrupt event that is external to the body and occurs by chance at an identifiable time and place that is not otherwise excluded under the policy.

What about pre-existing medical conditions?

A tuition insurance policy will generally state whether or not pre-existing conditions are covered. For example, a Liberty Mutual tuition insurance policy we examined says that an existing medical condition is covered if the student, “on the policy effective date, did not have any symptoms of the pre‐existing medical condition.”

But make sure you also look at the list of exclusions. The same Liberty Mutual policy excludes coverage for an injury or sickness if the student sought medical care or treatment for it in the 180 days immediately preceding and including the start date of the policy.

For example, if the student had a sprained shoulder within 180 days of the policy start date, and later drops out of school in order to have shoulder surgery, it would be excluded as a pre-existing condition.

What’s not covered by tuition insurance?

A tuition insurance policy will spell out circumstances that won’t be covered. For example, if the student simply didn’t attend classes and drops out, that’s likely not covered. Here are other common exclusions:

• The use of drugs or narcotics, unless it was prescribed by a physician.
• Suicide or intentionally self-inflicted injury or self-inflicted illness.
• Taking part in a riot, rebellion or civil commotion.
• Permanent or temporary closure of the college due to a natural disaster such as a hurricane, flood, tornado or earthquake.
• Participation in extreme or high-risk sports such as skydiving, scuba diving, bungee jumping, caving or mountain climbing.
• An epidemic.

Where do I buy tuition insurance?

You can buy tuition insurance on your own, or many colleges offer it in partnership with insurers. It’s easy to get quotes online.

How much is tuition insurance?

We looked at online quotes available from Allianz Global Assistance and Liberty Mutual for tuition insurance for a freshman in the fall 2019 semester. For Liberty Mutual quotes we had to choose a school, so we used Princeton University. Here’s a rate comparison.

What affects tuition insurance costs?

Each seller of tuition insurance will calculate rates differently. But in rate filings to state departments of insurance that EverQuote examined, we found common factors that led to higher rates:

• Freshmen can cost more to insure than subsequent years.
• Tuition insurance can cost more for two-year colleges, public colleges, for-profit colleges and colleges outside the U.S.

Making a claim on tuition insurance

Tuition insurance policies will spell out the requirements for making a claim. Make sure you read the fine print to know what’s needed. Here are some examples of what may be required:

• Complete withdrawal from all classes.
• Documentation for all college expenses being claimed.
• For withdrawal due to a psychological/mental condition, admittance to or examination in a hospital, with a written diagnosis by a psychiatrist of a condition classified in the Diagnostic and Statistical Manual of Mental Disorders (called the DSM-V).
• A physician recommendation to withdraw from the institution.

Updated Sept. 20, 2019