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September 14, 2016 - Insurance Tips When Sending Your Child Off to College

| September 14, 2016

Sending a child or grandchild to college comes with new insurance responsibilities. Whether they’re already in college or still have a few years to go, your family’s insurance needs change when your children go off to school. Addressing three key strategies will help you find comfort knowing you've protected everyone in the ways they need.


As we all know, college comes with a hefty price tag. According to CollegeBound, the average annual cost of tuition and fees at a public university from 2014 – 2015 was $9,139 for in-state students and $22,598 for out of state . Furthermore, private schools can cost over $60,000 a year for tuition, room, and board. Alternative funding vehicles can help parents and students offset the price of college — and one possible strategy is annuities.

As a financial vehicle, annuities can help you plan to meet short- and long-term goals. When you take them out in your child’s name under the Uniform Gifts to Minors Act, you create access to funds that they can use to help pay for college expenses. They can withdraw this money for any purpose when they need and want, beyond just educational costs. You need to make sure your children or grandchildren understand that you want them to use the funds for their education. Just note: When they do take withdrawals, they pay tax (and 10% penalty) on the earnings.

Life Insurance

No one wants to imagine outliving their child or grandchild. But, sadly, some families face this reality — though they never expected to do so. And, if you’re a parent or grandparent who cosigns a private student loan, then a life insurance policy for your college-bound child could be worth it.

Private student loans aren’t discharged upon the borrower's death — as is often the case for Federal student loans. So, if something unfortunate were to happen to your college student and they pass away, you as the co-signer are responsible for their debt. As a result, a little extra investment in protection today can potentially save you greatly in the long run.

Long-Term-Care Insurance

If you don’t already have long-term-care insurance, you may want to consider taking out a policy as you send children to college. Financial responsibilities start increasing once college is here. You can lessen these burdens by protecting yourself and your family with long-term-care insurance.

Costs associated with services such as nursing home care, home modifications, and hospice care can add up quickly. Should something happen to your health while your child is attending college, you’ll help minimize their financial strain with your insurance protection. Plus, getting your estate squared away and your inheritance strategies in place now — rather than reactively addressing this need — is always a sound decision.

A little insurance planning today can help you greatly tomorrow. If you’d like to talk about your insurance strategies for your college-age children or grandchildren, we’re happy to talk.