Should You Opt for School Insurance

by admin on January 22, 2012

Sending your children to private school is not only an important decision, but this amounts to a considerable financial investment. Depending on the location and type of school you choose, tuition fees range widely, with prestigious boarding schools costing over $50,000. This expense compares to purchasing a luxury new car. Naturally, you wouldn’t even think of driving your new vehicle without insurance. While this is true, what about sending your children to a boarding school without first protecting this investment?

You will be usually required to sign a contract stating that the fees you pay are non-refundable. What will happen, however, if you are transferred to another city, lose your job, your child falls ill, or he/ she is expelled? This is where school insurance comes in. It will cost you between 1 percent and 2.5 percent of the tuition fee, but this will give you peace of mind. Even if your kid withdraws before the end of the school year, you will still recoup a good portion of the tuition fees. If the child becomes injured or critically ill or dies, or if the parent or guardian dies, the insurance policy pays out up to 80 percent. In case of bankruptcy or job loss the policy reimburses up to half of the unused fees. Considering that layoffs loom, the economy is still shaky, and tuition fees increase, experts recommend school insurance as a good way of safeguarding the investment.

Buying tuition insurance is not necessary in all cases. This is the case with college tuition given that most universities reimburse part or all of the tuition paid if the student withdraws by a set deadline. Normally, this is within the first couple of weeks of the semester, explains insurance agent David Galvin. In addition, it should be noted that some college policies will pay out only if the student withdraws due to mental-health or medical reasons. (Smart Money) College plans do not cover other reasons students drop out, for example, family problems and academic difficulties (The Wall Street Journal).

The best strategy is to carefully evaluate the risks. According to certified financial planner Tim Higgins, college policies are hard to sell. After all, we are talking about 20-year-olds and their health, notes Higgins. If your children attend secondary or private elementary school, however, buying school insurance makes sense. This is especially true for parents that move a lot or those working for a company which is facing layoffs. Then, some parents think their skinny minny is just a little angel, but it is a good idea to check whether they are struggling with academic or disciplinary issues. This may put them at risk of being transferred or, God forbid, kicked out (Smart Money).

Before buying an insurance policy, it pays to read the terms and conditions, especially if your child is attending a more expensive university or college. For example, some school insurance plans have a preexisting condition exclusion of 6 months to 1 year (The Dallas Morning News).

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