School Fees Insurance
School fees are a major financial commitment for any family and it is highly likely that most parents will wish to consider insurance in case of problems in the future. If you are researching this type of insurance, be sure to compare products carefully. It is important to ensure that not only are all your requirements met but that the insurers define "fees" in the same way: for example, are only standard tuition fees included, or are extras such as coaching or music lessons covered by the policy?
Absence from School
If a child is absent from school due to illness, injury or any other cause, the school will not refund fees for the period missed. An absence insurance policy will provide a refund of fees in the case of your child missing school due to illness or accident. This money could be used towards the cost of paying a private tutor if, for example, your child is absent for a long time and needs help to catch up ready for exams.
Payment is made only after a minimum period of continuous absence (which may be from as few as 4 - 8 days depending on the scheme). Absence must be verified to the insurer by the school and also by the pupil's GP.
The premium per term ranges from 0.5% to 2.5% of school fees, depending on the waiting time before a claim can be submitted, and parents should make it clear to the school if they wish to take out this insurance as it is not automatically included in the school fees. Not all schools offer this insurance but, if not, the school office should be able to recommend a broker. Parents may also find policies available via their personal financial adviser.
Fee Payment Protection
Insurance policies are available to ensure that school fees will continue to be paid in the event of a family crisis, such as the death, major injury or serious illness of a parent, or unforeseen loss of earnings caused by redundancy. Although such insurance cover is not cheap, some parents may consider that their personal circumstances make it worthwhile.
Policies take the form of life assurance and/or income protection.
Policies may be written in trust so that payment of benefits would be made direct to the school and in the event of the death of a parent would not be considered as part of their estate in any calculation of inheritance tax. In the event of critical illness, a lump sum payment may be made which would take care of school fees.
The school, if it does not offer a suitable plan, should be able to recommend reputable policy providers, or else parents may prefer to consult their usual independent financial adviser or a specialist broker.
If parents have not previously engaged an IFA's services, please note that in the United Kingdom, financial advisers are governed by the Financial Services Authority. The FSA keeps a full register of approved, regulated firms and this register is available to the public.