Life can be unpredictable, and that’s what keeps it interesting.
But sometimes the unexpected costs a lot:
- Like if someone broke in and stole your laptop while you’re at the cafeteria.
- Or if that nagging toothache went full-blown abscess, requiring a root canal.
- Or if you got rear-ended on your way back from Thanksgiving break.
I could go on, but you get the idea.
Unless you’ve eliminated all risk from your life, it’s possible something bad could happen, even when you’re in college.
Which is why college students need insurance just like everybody else.
Insurance exists to shield you from these unexpected costs.
But this doesn’t mean college students need the same kind of insurance as everybody else.
By finding insurance coverage that best fits your specific needs as a college student, you can save money and get protection that won’t leave you exposed when you most need coverage.
Life Insurance for College Students
We’ll start here because this topic is no fun to talk about.
What would happen if you died unexpectedly while in college?
Of course, your family and friends would be devastated, but what about your finances?
The average college student graduates with about $30,000 in student loan debt, and that’s just for an undergraduate degree. Students earning advanced degrees often borrow much more.
If a parent or someone else co-signed on your loans, they may be responsible for paying them back if you aren’t around to do it, especially if they are private (not federal) loans.
The same may be true if you have a car loan someone co-signed on.
Life insurance coverage could cover these debts so your grieving co-signer wouldn’t have to.
Here’s how it works:
- Find a life insurance policy with enough coverage to pay your debts.
- Choose a beneficiary, which is the person who would receive the policy’s coverage if you died. Make sure it’s someone you trust.
- Pay the premiums each month (or each quarter or year, depending on how you set it up).
- If you died, your beneficiary would receive the policy’s coverage, tax-free, and could use it to pay off your loans, pay for your funeral, etc.
Life insurance policies come in many forms but they fall into two broad categories:
- Whole policies which last the rest of your life.
- Term policies which last for only a specific period of time.
Since a whole (sometimes called a permanent) policy lasts the rest of your life, it would cost a whole lot more for a college student.
Plus, as a college student, you probably don’t know how much insurance you’ll need over the coming decades, so it’s not a good time to make a permanent decision.
Most (all?) college students will do best with a term policy.
And that’s not the end of the decision making.
You’ll need to decide:
- How much coverage to get?
- How long you’d like to keep the coverage in place?
Those two factors have a direct impact on how much you’ll spend on your policy. Getting more coverage and keeping it for a longer term will make the policy more expensive to maintain.
Be sure you’re getting only the coverage you need. Life insurance policies can be huge — a couple million dollars kind of big.
You don’t need to go there.
If you have $75,000 in student loans and owe $20,000 on your car, and you expect this debt to be paid off within 10 years, a 10-year policy of about $100,000 would cover your needs.
Your age and health also impact the price (or premiums) you’ll pay for coverage, and for many college students, that’s actually great news. If you’re young and healthy you should have access to the best term life rates out there — possibly as low as $10 a month.
But don’t expect your insurance company to take your word for how young and healthy you are.
The company will want to know more so it can know for sure what kind of risk your policy would present. So when you apply for coverage, expect some personal questions.
You will be asked about:
- Your personal health history
- Your family’s health history
- Your hobbies and habits
- Your job or volunteer work
- Whether you smoke, vape, or use other tobacco products
You’ll most likely need a medical exam, too, to confirm your health information. This can seem like a big hassle, and it can be tempting to jump at a policy that promises no health exam.
But be careful; you can end up paying a whole lot more for no-exam life insurance because the insurance company doesn’t know the risk you present. It will have to make assumptions, and it won’t be assuming in your favor.
No exam insurance is not medically underwritten, which is why it costs more.
You can find medically underwritten life insurance that doesn’t require a medical exam, especially if you’re young and healthy. We’ll get into that in our company ratings below.
So, how do you find the right policy for you?
- For starters, you’ll need to get quotes.
- You could also talk to an independent agent who has knowledge of the industry but isn’t committed to a specific company.
- Or, in some cases, you can buy a policy online, directly from an agency or insurance company.
Life insurance is personal. There’s no one-size-fits-all approach, and there’s no way to make across-the-board recommendations for which company to use.
But, generally speaking, I think these companies would work well for college students:
I mentioned above it is possible to find medically underwritten life insurance without getting a medical exam. It’s still fairly uncommon, but Haven Life, an all online agency who sells Mass Mutual policies, can do it.
Only the healthiest applicants can get no-exam, medically underwritten coverage; others will still need an exam.
Even then, Haven Life has a lot to offer, including quick decisions and seamless online access to the buying process and customer service.
Banner Life is another easy-to-use insurance company that offers great rates, including lower prices for people who are younger and conscious of making the best health decisions.
If you ask for vegan options in the cafeteria and like to run 10Ks in your spare time, Banner Life can probably save you some money.
The company offers more than just term life, so be sure you’re getting a quote on a term policy.
This one might seem a little random, but I mention it because Minnesota Life excels with 5-year term policies, which are uncommon. Most companies offer term life policies for 10 or more years.
You never know what might change after college: Marriage? Kids? This will change your life insurance needs, too.
Sure, you could just replace a 10-year policy with something bigger. But a 5-year policy would cost a little less in the short run. It’s an approach worth thinking about.
Before moving on, let’s recap:
- College students should get life insurance that covers their co-signed debt and lasts as long as they expect to be in debt.
- A term policy has the flexibility to meet this need most affordably.
- For the most affordable rates, be sure you’re getting a medically underwritten policy.
Health Insurance for College Students
Best case scenario, your health care spending in college will include only routine check-ups and over-the-counter allergy or headache medicine.
But the human body can be frail.
What if you collide with a skateboarder on the quad and break your wrist? Or what if you come down with appendicitis and need surgery, plus a night in the hospital?
It’s possible to rack up six-figure medical bills that can take years, or even decades, to pay off.
Which is why you need some kind of plan in place for paying these expenses.
Enter health insurance. It’s much-maligned in this day of ever-increasing medical costs.
But there’s still no better insulation from the havoc these costs can wreak on your financial future.
Along with being sensible, it’s also the law. The Affordable Care Act of 2010 requires everyone to have health care insurance or to pay a fine at tax time.
So what are your health insurance options as a college student?
You may be able to:
- Stay on your parents’ insurance plan
- Get insurance without paying a premium through Medicaid
- Buy into your college or university’s health plan
- Buy your own plan through the Marketplace
- Buy your own plan from an insurance provider
Why you might already have access to health coverage
First off, if you can stay on your parents’ or guardians’ health insurance plan, that’s a no-brainer. You should do it. (The Affordable Care Act requires family insurance plans to cover children younger than 26.)
If for whatever reason this won’t work for you, Medicaid might be an option.
In some states, you can qualify for coverage if you earn less than 133 percent of the poverty level. For an individual, that would equal $16,146.20.
It’s possible for a college student to fall below that level, especially if you’re not a dependent on someone else’s tax form.
Other states have stricter criteria for qualifying for free health care. You can learn more here.
Buying health insurance coverage that fits
For many college students, though, the only way to get health insurance is to buy it. For college graduates, this is even more true.
Before buying coverage, it helps to know how health insurance works so you can be sure you’re getting coverage that fits your life and your monthly budget.
Your plan’s premiums will be a big part of that, just like with life insurance.
But also pay attention to the other costs, including:
- Co-payments you make to a physician’s office or pharmacy
- Deductibles you must meet out of pocket before an insurance plan kicks in
- Annual maximums a policy will pay
- Extra charges or non-payment for out-of-network doctor’s visits
These charges interact with each other to determine your true cost for health care, and you should make sure these costs balance out to match the way you live.
For example, a policy with higher deductibles should have a lower monthly premium, making the policy less of a burden each month if you’re low on cash.
An extreme version of this balance is a catastrophic health care plan that has a very high deductible and low monthly premiums.
With a catastrophic plan, you’re on your own for most doctor’s visits and prescription medications if needed.
Your insurance would kick in only if something catastrophic — something that likely required hospitalization — happened. A car wreck or a major surgery, for example.
For many college students buying their own health insurance, catastrophic coverage will likely do.
But stay away from this kind of plan if you have a chronic health condition which requires regular doctor’s visits.
How to buy a health insurance policy
When you’re ready to buy a health insurance policy, you have a few different options:
- Buy through the Health Insurance Marketplace which the Affordable Care Act created
- Buy your own policy through an agent or directly from an insurance company
- Buy into your college or university-provided health insurance
The last option, buying your school-issued insurance, may be your easiest route to coverage. In fact, it may be automatically included in your enrollment package and billed to your student account.
If that’s the case, you’ve got this covered.
If not, you’ll need to move on to another option.
Buying a health plan through the Health Insurance Marketplace has some advantages:
- Based on your income you could save big on premiums through tax credits
- It’s easy to access coverage through the government’s Web site
- You can keep your coverage if you drop out of school
- You won’t be using student loans or other financial aid to pay for health insurance
But this is possible only during Open Enrollment (or unless you qualify for special enrollment). Open Enrollment usually takes place November to mid-December.
On the other hand, buying your own plan from an insurer (such as Blue Cross Blue Shield or Aetna) has some plusses too:
- You can find a wider variety of health plans.
- You can keep your health insurance separate from politics.
- If you don’t qualify for tax subsidies, you may be able to save this way.
Recapping health insurance for college students
You need health insurance to shield yourself from out-of-control health care expenses that may result from an unexpected illness or accident.
If you can get insurance without paying, either through your parents’ plan or Medicaid, do it.
If not, look into your college’s health plan if it has one. If that’s not an option, try to save money through the Health Insurance Marketplace. If you can’t save that way, look into a plan from an insurance provider.
Car Insurance for College Students
Anyone who’s been driving for a few years already knows why car insurance is a must.
Wrecks happen, and without insurance, you could be on the hook for the cost of car repairs and personal injuries.
Then there’s the fact all states (except New Hampshire) require auto insurance.
But what kind of car insurance works best for college students?
First, some basics.
Auto insurance covers some pretty broad issues related to driving:
- Liability — If you hit someone, this coverage will pay to fix or replace that driver’s car and pay the driver and passengers’ medical bills. It will not cover your car’s damage or your health care bills. States require a minimum amount of liability coverage.
- Collision and Comprehensive — This pays for your own needs after a wreck (collision) or other damage to your car that results from something like a break-in or a fallen tree (comprehensive). You have more control over this coverage, and you’ll probably have a deductible. If you owe money on a car loan, the finance company may require a certain level of coverage.
- Personal Injury Protection — This is for your own and and your passengers’ medical expenses, lost wages, and even funeral costs. This kind of coverage is not required by all states.
- Uninsured or Underinsured Protection — This is for your own property damage and personal injury if someone who is not insured (or is underinsured) causes a wreck that damages your car or your health; also not required by all states.
Each state has its own auto insurance regulations, so if you’re going to college in a different state, you may need to adjust your current insurance.
But if you have insurance with a smaller company who doesn’t insure cars outside your state, you may need a new policy in the state where you’re attending school.
And even if you already have a policy, it’s possible you can save money with a policy that’s designed for college students and young adults.
Some of my favorites
A lot of car insurance companies offer special programs for students. Here are some of my favorites:
Amica’s Good Student Discount can save you 25 percent if you keep a 3.0 GPA, and it also offers a Good Driving Discount. These discounts apply only if you’ve been accident free for the past three years.
Amica even has a special rate if you don’t drive while you’re away at school but do drive when you’re back home.
GEICO has a Good Student Discount, too. If you’re between 16 and 24 and have a B average, you can claim a 26 percent discount on your premiums.
The company has discounts for good driving, and an Accident Forgiveness program in most states. You have to do more than earn good grades to get these discounts, though.
Like Amica and GEICO, Esurance has a student discount program for students with a 3.0 grade point average or higher.
Esurance also offers smaller discounts for buying insurance online and for paying in full, instead of in installments, for your policy.
How much auto coverage do you need?
You can save money by getting insurance which meets only your state’s minimum requirements, but remember:
If you don’t have enough insurance, you are personally responsible for car repairs, hospital bills, and lost wages that you cause in an accident.
If you have $20,000 in liability, for example, and cause $50,000 in damage, you could be sued for the other $30,000.
If you can’t pay it, the court could sell your property to cover the costs.
Still, as a college student, you don’t want to overpay for anything, and that includes car insurance.
So let’s look at each component of auto insurance individually:
- Personal Injury Protection (PIP): If you already have enough health insurance, you should be OK without investing a lot here. Stick with your state’s minimum.
- Collision and Comprehensive: These two components cover your own property. You can get higher deductibles here and save on your monthly premiums. But you don’t want a deductible that’s too high. Why have coverage if you can’t pay the deductible that unlocks it?
- Liability: Don’t skimp here. Even if your state requires a low amount of coverage, remember that you’d be liable for what your insurance doesn’t cover. The average car is worth about $20,000. A hospital stay can easily cost $100,000. If you hit a car with multiple passengers, medical bills could be several hundred thousand dollars. Get coverage that reflects this reality.
- Underinsured or Uninsured: This is an inexpensive add-on, but a game-changer if you needed it. I’d add it on.
- Extras: A lot of insurers offer extras like roadside assistance or towing insurance. I’d skip on this and just join AAA if you’re worried about getting stranded.
So let’s recap.
We live in a car culture. Unless you’re going to college in New York City or somewhere else with great public transportation, you’ll probably be driving a lot.
The more you drive, the more likely you’ll be in a collision.
If you can’t afford hefty coverage on your own car, find a way to properly cover your liability in case you cause an accident. If the worst happened, you’d be glad you did.
Dental Insurance for College Students
Compared to some of the other kinds of insurance that deal with life and death or court-ordered property seizures, dental insurance might not seem like a big deal.
Until you need a root canal or a crown or a wisdom tooth extracted.
Along with the pain, the discomfort, and the inability to eat properly for a while, you can leave a dental chair with several thousand dollars in charges, due immediately.
Without dental insurance, you may be stuck trying to explain, with a swollen jaw, why there’s no way you can pay for the procedure the dentist just finished.
At that point, the office manager may bail you out by handing you a brochure for a medical credit card.
If your credit holds up and your application gets approved, you can transfer the balance to the card on the spot and head back to campus with your dignity intact.
But the sense of relief lasts only so long. The health credit card bills start coming, and the interest rate is high.
If you got a deferred interest plan, the race is on to get the balance paid off before the finance charges kick in.
Yes, there are worse calamities facing the world today, but wouldn’t it be nice to avoid the extra little hassles like unplanned debt?
Dental insurance can help with this. If you’re prone to dental, periodontal, or endodontic troubles, dental insurance may be a must.
Even if you aren’t, preventive care can prevent costly procedures, which is why many dental insurance plans cover 100 percent of preventive care.
How to get dental insurance coverage
Just like with health insurance, if you can stay on your parents’ dental insurance plan, you should.
If not, see if your college or university’s insurance includes dental.
If you qualify for Medicaid, you can go that route, although many dentist’s do not accept Medicaid patients.
If you can’t access coverage in those ways, you may want to buy your own plan, and the average cost for an individual plan is about $25 to $30 a month.
Yes, that’s a chunk of change that could go a long way at the grocery store or the gas pump.
But when you consider the cost of even the most basic, preventive dental care, the cost is worthwhile.
Along with paying for preventive care, a typical plan pays 80 percent of routine procedures such as root canals and fillings while paying around 50 percent of more advanced procedures such as a