Become a college planning insurance expert
By Frank N. Darras
One of the most stressful things a family can go through is saving to help their child pay for college. Most people don’t know where to begin saving for even one child’s education. What if they have multiple children? The process of going to college has become so convoluted and expensive that most parents are at a loss as to what comes first. It is up to you, their agent, to make sure they get a decent start on at least one important area of their lives — insurance.
While your field of real expertise may lie in one or two very specific areas, you can increase your knowledge in other areas to expand your client base. Many different types of insurance exist for you to help individuals and families, from health and life insurance to auto and disability insurance. Knowing about college loans and financial aid is an added benefit. Why not mention the 529 educational savings accounts and recommend they talk to their tax advisor about how to create one?
As you may know, one way of saving your client money is bundling policies like life and disability insurance or adding on auto insurance to an existing insurance policy. Bundling these policies can help young students while they are in school, as well as giving them a head start after graduation. With a bundled insurance plan, you eliminate worry at graduation time when the student should be concentrating on the difficult task of finding a job in today’s economy.
While not as common, health insurance can sometimes be bundled with other insurance products. Most colleges and universities now require health insurance, which isn’t too bad, considering kids can now stay on their parent’s health plans until age 26. Be careful to review their plan, because you don’t want them to incur out-of-network charges for doctor’s visits. If the parents would prefer, schools often provide their own health insurance plans for full-time students. These plans are good for general things, like shots and checkups, but look at the fine print to be sure expensive medical costs such as specialist visits or surgery are also included.
If you want to be a college planning expert, health insurance is one of those necessary evils that you will need to be knowledgeable about, even if you don’t offer it. With all the recent changes in health insurance due to the PPACA, many of your clients may have questions you can help answer.
Property, or homeowner’s, insurance is another convenient insurance where a college student should be included. Homeowner’s insurance covers theft or damage to personal items while students are away at school. You will need to review the current family policy to see how much coverage the student will receive living either off or on campus. If the student is not planning on living at home, they are typically allotted 10 percent of the current policy coverage. If the student is considering living in an off-campus apartment with school friends, you may want to discuss renters insurance as an additional option. You may be surprised to know that life insurance for students and young adults is more important than most realize. Whereas federal loans are forgiven if the student suddenly dies, many private loan companies will continue to expect payment. How will families be able to afford to pay back a loan in that case? A lot of parents may borrow against their home to cover a college loan, and the life insurance policy can be used to pay it back. There are also the unforeseen financial expenses for a funeral service and even sizeable medical bills. When someone is young and healthy, life insurance policies are generally inexpensive and will be a financially sound addition to any student’s insurance coverage.
Auto insurance is an easy addition to an existing insurance policy and will cover almost any issue with their car. Premiums may have to be adjusted, depending on if the student is living in a rural or urban area and even if they are parking in a garage or on the street. Auto insurance is required in 48 out of the 50 states, and is absolutely a must for young drivers, especially teens, as their auto insurance premiums tend to be the highest. In cases like this, the cost-saving effects of bundling insurance will be greatly appreciated by the family.
If your clients are young and still discussing the possibility of children, politely find a way to introduce college savings methods such as a 529 college savings account. Double check the rules for the state you’re licensed in, since state tax benefits change from state to state. In addition to the 529 account, they can also take advantage of the American Opportunity Credit as a tax benefit.
As an insurance agent, you are an invaluable asset to families who will have future education-related expenses. Providing these families with the right insurance advice and policies can save them a lot of hassle and money. You can become a sought-after expert in an area with ever-increasing confusion. College-planning advice is hard to come by, so don’t be afraid to learn new things and help families in real need.