Your child is off to college, and while this is generally a very joyous time, it can also be very nerve-wracking: after all, the cost of college has been increasing over the last decade and it doesn’t look like it will be slowing down anytime soon. In fact, we have $1.4 trillion in outstanding student debt in this country! About 93% of student loans have a cosigner – and if your family is like many families, you are that cosigner. If something were to happen to your child and they were to pass, you would be responsible for your child’s student loan. You can protect yourself by buying life insurance for your college-age child, to ensure that these loans will not financially cripple your family in the future.
Types of Student Loans
Before we look at the best types of life insurance for your family, let’s take a look at the types of student loans that your child might need to take out to fund their education. There are generally two kinds of loans that you can take out: federal student loans and private student loans. Federal student loans will most likely not require a cosigner, and if the borrower passes away, they will not be passed on to family members. On the other hand, if your child takes out a private student loan, they will most likely need a cosigner who will be responsible for the debt if the borrower passes away.
Do You Need Life Insurance?
If you are a cosigner of your child’s student loans, you will be responsible for the loan in the event of their passing. We know that no one wants to think about losing their child, but if they are going off to college and are taking out a private student loan, you should think about purchasing life insurance for them, since their debt would fall on you if they were to pass away.
Which Policy Is Best?
There are many different kinds of life insurance policies that you can choose from, but if you are considering a plan for a college student there are two main types of policies you should think about: whole life insurance and term life insurance. Term life insurance will cover your child for a set period of time (like 5, 10, 15, or 20 years) before expiring, while whole life insurance will last for the rest of the policyholder’s life.
If you’re looking to cover your child during their student loan payback period, a term life policy is a good way to go, since you can choose the amount of time you want the policy to cover them for. If you are looking for something your child can one day take over the payments for and have for the rest of their life, consider a whole life insurance policy.
How Much Coverage Should You Get?
If you have decided to get a life insurance policy for your child the next thing you need to consider is how much coverage you will need. The amount of coverage that you need will be determined by how large a student loan your child has. The best way to calculate the amount you will need is to take into consideration the loan amount, how long you expect the repayment period to be, and the amount of expected interest. Generally, private student loan repayment periods range in length from 5 to 15 years, with an annual interest rate that ranges between 3 and 15%.
It is not easy to think about losing your child, especially as they embark on this new journey in life. But if you are a cosigner to their student loans, you will be responsible for paying off their debt, which can be crippling, especially since the average student loan is almost $55,000. There are many great affordable life insurance options to choose from that will provide enough coverage for this type of debt for a low monthly price. The best way to find the right life insurance policy that will work for you is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.