Many college aid experts argue that tuition insurance is unnecessary, since college-age students are generally healthy. Insurance makes little sense if the college has a generous refund policy of its own.
Still, tuition insurance is an option that students and their parents should consider, as a $400-per-year policy would seem cheap if the alternative were to lose tens of thousands. Many policies also cover accidents and study abroad.
In addition to considering cost, families should look carefully at what is covered. In many cases, withdrawals for psychological or emotional conditions get smaller refunds than ones for physical conditions.
Some policies also deny refunds for pre-existing conditions, which can be defined in various ways.
Like auto insurance or term life policies, tuition insurance pays off only if you have a claim. There’s no investment component as with whole life policies. But tuition insurance is relatively inexpensive, and for many families well worth the peace of mind.
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