It's that time of year again and families around the country are preparing for college. With in-state public university tuitions averaging around $20,000/year and private university tuitions averaging near $45,000/year, college is a big financial commitment. Here are a few tips to help parents financially survive college:
Check your insurance policy and make necessary adjustments. Make sure your student's car is covered under your policy or their own.
Liability protection: This is not something to skimp on - get the maximum. Your child may not have a high net worth, but what about the person they hit and injure in an accident? Attorneys and insurance companies consider "human life value" when determining an appropriate claim payout. For example: your student is responsible for an accident that severely injures (or kills) a 40 year old professor who makes $80,000/year. The professor's human life value is around $2 million (# of years left to work x salary). The attorneys will go after that amount and the insurance companies can't argue. How far will your $50,000 liability coverage get you? Not far. You and/or your student will then have to find a way to pay the difference between your liability coverage and the claim. Emptying 401Ks, home equity, wage garnishment - none of that sounds good. Instead, adjust your liability to the maximum and add an umbrella (liability) policy.
Under/Uninsured Liability protection: Don't forget about your student - what if they are hit by an under or uninsured driver? Make sure you and your child are protected by adjusting those liability limits to the maximum as well.
Property damage: Update the coverage on the property damage. Your student may be driving a beater, but that doesn't mean they can't run into, and total, a Lexus.
Typically by raising your deductible, you can add higher liability coverages and add an umbrella policy without affecting your premium. Talk to your agent for more details.
Laptops, TVs, tablets, Blu-Ray players, gaming systems, cellphones and other devices are packed in with all the other college gear. These big ticket items are prone to be stolen and are expensive to replace. In a recent survey, 48% of parents worry about these replacement costs.
Check your homeowner's policy to verify your coverage and consider renter's insurance for your student. Have your child video their college home to create an inventory of their belongings. Talk to your agent for more details.
College brings a new exercise and eating regimen to your student. Eating on the run, from a machine or a cafeteria, and pulling all-nighters tends to put your child at risk for getting sick. Under ObamaCare, your child can stay on your health insurance until the age of 26. However, that doesn't ease the stress of having a sick child far from home. Here are a few tips for students and parents when a child gets sick.
COMPLETE YOUR STUDENT'S FINANCIAL AND MEDICAL POWER OF ATTORNEY
At 18, a student becomes a legal adult and a parent's ability to help in a medical emergency is limited. HIPAA laws protect your child's privacy, but also prevent you from assisting or even getting information in the event of an emergency. Talk to your child and set up a financial and medical power of attorney, so that you can care for your child in an emergency. Remember, the power of attorney is only in the event your child cannot care for him/herself. Contact Easy Legal Planning for help.
In a recent survey, 39% of parents reported they may not have enough life insurance coverage to pay for 4 years of college. Review your life insurance policies and ensure that you have enough coverage to send your child to college, even if you aren't around. You may also consider a policy on your student. If your child passes away before college loans are paid for, a life insurance benefit would be a huge help. Talk to your agent for more details.
College is an exciting time in your student's life. With just a few preventative measures, you can sit back and survive, if not enjoy, this time too.