Looking for a quote for life insurance or burial insurance? Click here and send me a message with details of what you’re wanting to accomplish. If you’d prefer to talk live, call 888-626-0439 to speak with me directly.
In this article, I’m going to talk about why college students should consider purchasing life insurance, especially if they have student loans
Whether your’re a parent looking to purchase coverage for your child who is in college or a student looking for your own coverage, you’ve come to the right place. Most likely you’re here because you’re wondering how to go about purchasing a life insurance plan. Or perhaps you are wondering under what circumstances it may make sense to purchase life insurance, especially considering concerns with student loan debt.
In this article we will discuss a number of factors important to college students and/or their parents including:
- Why college students should consider life insurance & Elements that may be of concern to you such as student debt and what happens to it after a college student dies
- Sample life insurance policies and their rates
- Types of insurance available to students
Why college students should consider life insurance
First and foremost, college students owe money. Most students take on student loans and have a financial responsibility to pay off their student debt.
Have you ever imagined what would happen if your child passed away or if you passed away? Who would be responsible for the student loan debt? Well, there’s good news and bad news. The good news is that if you took your student debt out from Sallie Mae or any governmental organization, the likelihood is extremely high your debt will be forgiven. A co-signer would also be forgiven in this circumstance.
On the other hand, student loans that are not private – in other words they are not government backed – your family or co-signer could be responsible for paying off the entirety of the loan. And this is where problems can arise. Imagine being responsible for several hundred thousand dollars in student debt loans that you didn’t accumulate.
You would have to pay off this debt over the course of a number of years, which could encumber you financially to the point that you couldn’t necessarily do the things you originally wanted to do in your life. This is why if you or your child have a private loan, it’s extremely important to consider a life insurance plan.
College students normally pay very low life insurance rates
One of the easiest ways to convince somebody with student loans to purchase life insurance is the incredibly low rates. Simply put, when you’re in your late teens to early to mid twenties, as most college students are, the price point for $1,000 of coverage is incredibly low relative to those in their thirties, forties, fifties and beyond.
As a student, you have an obligation to ensure yourself now while the cost is substantially less expensive than to wait and put off the decision only to face higher rates. Below you’ll find our rate charts for males and females aged 20, 25 and 30 years old for ten year term coverage for a quarter million dollars for smokers and nonsmokers.
As you can see, the rates are incredibly competitive and probably not nearly as expensive as you imagined they would be. These rates are subject to underwriting and the decision of the underwriter upon reviewing your application.
College students are the easiest applicants to insure
When you take the average applicant and asked who is the easiest type of person to ensure, it’s likely every broker will tell you college students are the easiest to insure. College students are more likely to fly through the underwriting process and not experience nearly the same amount of frustration and underwriting perils that many people twice their age and older may experience.
The truth is that most college students are young and they’re healthy. They’re not on prescription medications, most of them have not experienced health problem, and because of this it’s likely that they’ll get coverage on the books much easier than if they wait until they are double their age.
What types of life insurance coverage are available to college students?
There are three different types of life insurance available to college students or their parents. It’s important to understand the kinds of plans and their differences so that you can determine which plan makes the most sense for the goals you want to accomplish.
1. Term Life Insurance
Term life insurance is designed to provide temporary life insurance over a set period of time. During the period a level or guaranteed premium is paid. This kind of life insurance is also known as pure insurance.
The concept of term insurance is to insure against some sort of temporary obligation that won’t necessarily be there permanently. A perfect example of this is student debt. Loans are not a permanent obligation, so at a future point life insurance for student loans will no longer be necessary once the loan is paid off.
It’s very likely that if you’re looking to get a life insurance plan on a college student, buying a term life insurance plan will make the most sense as far as time period of coverage. My recommendation is to buy the highest amount of life insurance coverage that you can. On average, college students are younger and will easily be able to qualify for a 30 year term that will cover that person for the length of the life of the debt.
The nice thing about taking out insurance as a college student is that if the parent is paying for the insurance, once the student graduates and pays off their bills the policy payments can be transferred to the student. Thanks to buying coverage early in life, you now have a super affordable policy as well.
Term Life Insurance Coverage – 10 Year Term – $100,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $250,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $500,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $1,000,000 in Coverage
2. Whole Life Insurance
Rates For $10,000 In Burial Insurance
Rates For $25,000 In Burial Insurance
$150,000 Whole Life Insurance, Life Pay
$250,000 Whole Life Insurance, Life Pay
Unlike term life insurance, whole life insurance guarantees that the coverage will never be cancelled due to age or health as long as the premiums are paid in a timely fashion. These plans are great in the sense that you cannot outlive them like term insurance.
But the problem with permanent products like whole life insurance is that the price points generally are five to 10 times higher than term insurance, which turns many people off this type of coverage. However, if you’re adamant about getting a permanent life insurance plan, they are still affordable and definitely less expensive than if you were to buy term insurance in your forties, fifties, or beyond.
3. Universal Life Insurance
The third and final option for college student insurance coverage is universal life insurance. Universal insurance is a hybrid policy that draws some advantages from both permanent coverage as well as temporary coverage, but generally is a more permanent product. If you need more permanent protection, you can custom tailor it to suit that need.
$50 a Month – Guaranteed Universal Life Insurance
$100 a Month – Guaranteed Universal Life Insurance
$150 a Month – Guaranteed Universal Life Insurance
It can also act as a term type of vessel, but has an underlying cash value strategy available so that you can accumulate dividends and grow cash value. A universal plan is commonly used for what we call supplemental life insurance retirement plans and typically not for situations where coverage is needed for temporary obligations.