Do you have children who are getting ready for college? Have you considered there are more things that need to be addressed besides writing a check for tuition? If you have been planning on your child attending college hopefully you were prepared and contributed to a 529 plan or made arrangements with some other means to pay for the cost of college. If you are a young couple or parent it is never too early to start saving for the cost of college. Consider this, on average inflation over the past ten years has been about 3% while the cost of college has outpaced that and education costs have an inflation rate of closer to 5%. The key to paying for college is to use tax advantaged accounts, save often and start early and let compound interest work in your favor. But this blog is not about how to pay for college but rather how a child attending college affects your insurance policies.
Let’s first look at health insurance. Most policies allow for adult children to remain on the parent’s policy until age 26. Now the problem is many kids do not stay around where the policy has an in-network option for healthcare. If your child goes to college very far away the only option for their healthcare may be out-of-network providers or care for emergencies. Despite having coverage your child may not be adequately cover in the event they get sick. To supplement a parent’s coverage it may be wise to look to the college itself for a student policy. While many of these policies limit coverage to a campus clinic or a nearby hospital which is affiliated with the college they are relatively inexpensive and can provide a great peace of mind to both your child and yourself. A final option is to go to the healthcare exchange and purchase a policy outright through the exchange. While these policies may not be eligible for the subsidy because your child is most likely still a dependent the costs are really affordable and may provide a better range of coverage than a parent’s policy or a policy purchased through the college. Weigh the options and shop around for the best policy for the money. No one knows what is in someone’s future health wise but it is better to be prepared.
Now when your child goes off to college they take many of their possessions with them on this madden voyage into adulthood. If you child lives in the school’s housing your homeowner’s policy will generally cover around 10% of the value of the items they bring. The reason this is limited is because they are not in your home anymore and are at the college. The liability limits will generally be the same as they are at your residence. Of course you may purchase additional riders to cover high ticket items that your child may have brought to college with them such as laptops. These additional riders are generally inexpensive and can cost anywhere between $50 and $100 a year depending on the amount of coverage that is required. If your child rents and apartment or house they will need renters insurance to cover their possessions and it is wise to also make sure that they have at least $500,000 in liability insurance. A basic policy that covers about $15,000 in possessions and $500,000 in liability coverage can be between $125 and $150 a year.
As far as car insurance it will depend on if your child takes a car to college with them or not. If you keep a child on your policy and move over 100 miles from home and do not take a care with them your premiums can decrease as much as 40%. And the best part is when they are home or drive a car at college they are still insured on your policy. And of your child does take a car to college you may even see an increase in your premiums depending on where you live and where the college is located. Encourage your child to get good grades and maintain a B average and your premiums may decrease between 5% and 15%. It may even be cheaper to have your child on their own policy and take them off of yours completely. Like with health insurance understand your policy and shop around for the best policy under the best conditions.