Making the move from high school to college is a huge milestone in life. As such, it can be more than a little nerve-wracking for parents and students alike. Being off on your own for the first time, means a lot of unknowns, especially when it comes to important investments, like insurance.
That is why you want to make sure you are properly covered before you head off to university. Luckily, we can help you educate yourself about your insurance needs and options, so it doesn’t become overwhelming or intimidating. Here’s what college students should know about insurance.
Auto Insurance
Your needs may be a little different if you’re still covered on your parents’ auto insurance plan. You’ll need to consult with your insurance company to let them know that you’re going to college as this may change your rates and your coverage needs. Plus, they’ll need to know key details about your address change when attending an in-state college.
If you attend college out-of-state, you may need a new policy altogether as not all companies operate in all states and as laws concerning insurance requirements vary from one state to the next. If you can remain on your parents’ policy, though, it is often financially beneficial to do so.
Health Insurance
Thanks to the Affordable Care Act (ACA) college students may remain on their parent's health plans until reaching the age of 26. This is a huge benefit to many students if your parents can afford to (and are willing to) continue providing this coverage. However, you may wish to purchase your own policy through a future employer or independently from your parents’ insurance. Before you do, though, there are a few terms you should make yourself familiar with.
- Health insurance deductible: Refers to the dollar amount of covered health services you must pay for, out-of-pocket before your insurance plan begins to pay.
- Copay: A fixed amount you must pay for specific healthcare services once you’ve met your deductible for the year.
- Coinsurance: This is the percentage of the costs of healthcare services you are responsible for once you’ve met your deductible for the year.
Another thing that takes many students by surprise when it comes to health insurance is that deductibles reset with the beginning of each new calendar year. Even if your current insurance coverage began in October or November, your deductible will reset on January 1 of the following year.
Renter’s Insurance
If you live anywhere other than your parents’ home while attending college, you may need renter’s insurance. If you live in college dorms in the same state as your parents, you may be covered by their home insurance policy. However, if you rent an apartment or house while attending college, regardless of state, you’ll need to purchase renters’ insurance to protect your belongings and provide vital liability insurance coverage to protect your financial assets and future.
Life Insurance
If you do not already have a life insurance policy, this might be the perfect time to consider looking into it. Do college students need life insurance? Not necessarily. However, you’ll find life insurance rates are much cheaper in your 20s than they are later in life, and it is often an investment worth considering. Why are rates lower when you’re in your 20s? Because insurance companies assign rates based on their level of risk. People in their 20s are statistically less likely to die than those who are older making it a “safer” investment for the insurance company to make.
Insurance is something in life you’ll always need to stay on top of. The earlier you learn to manage your policies, the more success you’ll have in addressing life changes and your evolving insurance needs to respond to those changes. Don’t forget to review your insurance portfolio each year to make sure your current coverage continues to meet your needs and those of your family.
