I have never heard of tuition insurance. I do not know how much you paid for it but if you are worried your daughter will not finish what she starts, I would not have her start it? Usually one can drop out with no penalty up to about the middle of the course and, after that, you probably will have paid as much in premiums as you will get back? I would not buy that kind of insurance.

I can see if she gets physically sick, one does get suddenly physically sick and have to drop out but mental illnesses one usually already has so can "get again" (depression comes to mind) and the chances of that are greater than suddenly being in an accident or something and having to drop out. Mental health insurance is a bit like dental and vision insurance, only those who want to use it are going to buy it so there is no one "healthy" to pay premiums for those who get sick. Insurance is a business and regulated by your State. They cannot discriminate or they would not be allowed to do business/sell policies to you.