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Insurance Needs for College Students

College life offers a whole new world of experiences and learning as students transition from their parents’ home to living on their own. In all stages of life, having the proper insurance helps ensure a person’s financial means remain intact. The same goes for college students. From a comprehensive standpoint, the same types of insurance needed while at home are the same types of insurance needed while in college. This means students should consider insuring their health, their cars, their personal belongings and also their lives.

Health Insurance Needs

A student’s health insurance needs while in college will depend on circumstances at home as well as any individual circumstances that may influence their eligibility for insurance. While living at home, some students may already have health insurance coverage under their parents’ insurance plan. Though health insurance regulations can vary from state to state, many states allow full-time students to remain on their parents plan up to a certain age. The age cutoff can range anywhere from 26 to 30 years old so this is one option for students covered under their parents’ plan.

Something else to keep in mind is the type of health insurance coverage a student’s parents may have. For HMO plans, plan benefits may only apply for services received within an assigned network of providers. In this case, plan benefits would only cover emergency services for students who lived in another state or outside the plan’s coverage area. Likewise, for PPO plans, benefits received for any services (excluding emergency treatment) received outside the preferred provider network would only be paid at the non-preferred level.

Other student health insurance options include –
• COBRA, in cases where a parent’s employment ends
• Student health insurance offered through the school
• Group health insurance, in cases where a student holds down a job
• Individual insurance coverage, which can be costly

Car Insurance Needs

Students fortunate enough to have access to a car while at college will definitely want to ensure they have adequate amounts of insurance coverage. Most states require all motorists to carry liability insurance at the very least. Not doing so means students would have to pay a fine and may even have their license revoked should an accident occur.

Just like with health insurance, laws vary from state to state when it comes to car insurance requirements. Students driving older model cars may be able to settle with liability coverage, which covers bodily injury caused to others as well as any property damage that occurs. Each state has minimum coverage requirements, so a policy should at least provide the minimum coverage.

For newer model vehicles, students may have to purchase more coverage since lenders typically enforce their own set of minimum coverage requirements when financing a vehicle. Comprehensive coverage pays for damages caused to the student’s car in the case of an accident. Comprehensive coverage also pays for any necessary medical treatment for passengers in the car. This type of plan also covers students if they’re struck by a vehicle while walking and as a passenger in another car.

Insuring Personal Belongings

Students who need to insure personal belongings, such as clothes, electronic equipment and jewelry can go one of two routes: their parents’ insurance plan or rental insurance. Students residing with their parents while in college may have their personal belongings covered under their parents’ policy. In many states, as long as the student falls within the policy’s age requirements for dependents and attends college on a full-time basis, their personal belongings are covered under the parents’ plan. For high-tech electronic equipment or expensive jewelry, it’s always best to check the policy limits to ensure the plan will cover any possible losses.

Students who are married or living outside their parents home – whether on campus or in an apartment – will want to consider purchasing renter’s insurance to protect their personal belongings. With renters’ insurance, these policies cover replacement costs on an “actual” cash value basis for any losses. Actual cash value is what a particular item was worth before the loss and not its value purchased brand new, so depreciation factors come into play.

Life Insurance Needs

While planning for an untimely death may not be at the top of a young college student’s to-do list, there are instances where purchasing life insurance is warranted. Oftentimes, parents have already taken out policies on their dependents, either through work benefits or through individual policies. In this case, college students need not worry. If this is not the case, at the very least, students may want to consider purchasing term life insurance to cover the costs of funeral expenses and debts.

For situations where parents have co-signed on a student loan (or loans), having a life insurance policy in place ensures this debt is covered in the event of a student’s untimely death. Granted, many college loan lenders include a debt forgiveness clause in the event of death, but not all of them do. It’s always best to fully understand the terms of a life policy to ensure all necessary coverages are in place.

Considerations

In terms of car insurance coverage, it’s not uncommon for students to have a parent’s (or guardian’s) name listed on the title of the vehicle. In these instances, students may be eligible for coverage under their parents’ insurance policy as an additional driver. In cases where students will be driving the car in another state, the insurer does need to be notified of this change in location to ensure coverages remain intact. If the student’s is the only name on the title, he or she will need to purchase individual auto insurance, which tends to run high for young drivers.

It’s not uncommon for students to have limited financial resources while in college, which can make finding affordable health insurance a challenge. In these cases, students may be eligible for one or more public health insurance programs. These programs provide free or low cost health insurance for people unable to afford their own coverage. Medicaid and Family Health Plus are two programs that can be of help.

While purchasing insurance may seem more like a hassle than a necessity, having the necessary coverages in place can help students avoid big financial problems down the road should an unexpected event take place.

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