Also known as tuition refund insurance, tuition insurance is a type of insurance policy that provides some type of compensation in the event that a student must withdraw from formal studies in the middle of a school year. The terms of a college tuition refund insurance policy require that the reasons for the withdrawal have to do with some type of pressing situation, and not simply because the student decides he or she needs to take a break from school. Premiums on this type of insurance are usually determined as a percentage of the total cost of tuition for the school term covered by the policy. Insurance of this type may be obtained directly by the student, or obtained through third-party programs that are made available by the college or university.
One of the most common situations where tuition insurance comes in handy is in the event of an unanticipated illness. Should the student be injured in an accident or come down with some sort of long-term illness that prevents him or her from continuing in school, the coverage can help offset some of the expenses already incurred during the school year. For example, if a student is in an auto accident and is hospitalized for several months, the insurance can reimburse the student or the parents for the tuition paid for the remainder of the school year. Some policies also provide some compensation for various fees and other college related expenses that are incurred prior to the event that makes it impossible for the student to complete the current quarter, block, or school year.
Other situations may also be addressed in the terms and conditions outlined in the tuition insurance coverage. Some plans will also cover withdrawals due to job losses, especially when the student depended on that job to cover living expenses while taking classes. In the event that an adult student is transferred to another location as part of his or her job requirements, the insurance may also reimburse any remaining expenses associated with the school term. In rare situations, tuition insurance may even cover situations such as dismissal or suspension by the school, although this is not always included and usually involves a reduced compensation, since it may be construed as an action that resulted from voluntary choices made by the student.
Many tuition insurance packages offer full reimbursement for the loss of tuition and related expenses, as long as the circumstances surrounding the withdrawal qualify under the terms of the policy. Some plans do offer reduced compensation, based on the type of issue that led to the withdrawal, and at what point the withdrawal occurs during the term. For this reason, it is important to read the provisions in the insurance agreement before making a commitment. This will help to prevent any misunderstanding should a student find it necessary to withdraw from the college or university at a later date.