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Insurance Education

Life Insurance & Student Loans: Considering Coverage in College

October 2, 2018

When you’re in college, getting a life insurance policy probably isn’t at the top of your to-do list. OK, let’s be real…life insurance probably isn’t anywhere on your to-do list, not even way down at the bottom with the things you just put there because you were on a goal-setting roll, like, “learn to make a souffle” and “watch more documentaries.” But if you have significant student loan debt (like 70% of recent college graduates do), you may want to think about adding “get a free life insurance quote” to the queue.


But I’m too young to get life insurance!


While it’s a common misperception that you don’t really need life insurance until you have a spouse and/or children who depend on you financially, there are some pretty important reasons to consider getting covered even if you’re young, single, and don’t have kids. Student loans are one of the most important, especially since the average amount of debt Americans graduate with has been steadily rising.


So what exactly would happen to your student debt if you were to die? It depends. Federal student loans are typically forgiven if the borrower passes away, but private loans may be a different story. Not everyone borrows from private lenders, but with 64.2 billion in outstanding private student loan debt, and 36% of students not even completing the FAFSA (Free Application for Federal Student Aid), it’s safe to say this could affect a lot of Millennials. Maybe you’re one of them.


What’s the worst that could happen?


If you are someone who needed to borrow private funds to cover the cost of your education, your parents (or another family member) probably co-signed for those private loans. That means that if you were to die suddenly, someone you love may be responsible for repaying that debt. While the average private student loan debt of $13,600 could be a hard hit on most families’ finances, in some cases, the tragedy of losing a child unexpectedly can be compounded by a financial horror story like the one Steve and Darnelle Mason experienced.


The Masons cosigned a $100,000 loan so that their daughter Lisa, a mother of three, could attend nursing school. When she passed away at age 27, they were left with that debt in addition to the expense of caring for their grandchildren. Student loans aren’t generally discharged when the responsible party files for bankruptcy, so after four years of unimaginable stress and ruined credit, the Masons were forced to turn to crowdfunding to help cover the debt, which went up to $200,000 with interest and penalties. A life insurance policy could have helped to cover some of that expense before it escalated into years of struggle for a grieving family, and Steve Mason said, “I absolutely wish we’d had [life insurance].”


But isn’t life insurance super expensive?!


We know what you’re probably thinking: “Sure, I want to do everything I can to help protect the people I love, but I just can’t afford life insurance right now!”


So we have some good news: 44% of Millennials overestimate the cost of life insurance by FIVE TIMES the actual amount!


If you are young and healthy (and therefore fairly unlikely to die anytime soon) it doesn’t necessarily mean you don’t need life insurance, but it DOES mean you can most likely get it at a very affordable rate.


For what you’ve been handing over to the on-campus baristas every day for the last few years, you could probably have enough coverage to help take care of your student loans and final expenses if the unthinkable were to happen. That’s actually a pretty awesome deal for the peace of mind knowing that your family has some financial protection against your outstanding debt, right?


OK, but I don’t know the first thing about life insurance. What kind should I get?


First of all, check out our handy Life Insurance 101! Secondly, yes, it can be confusing, but when in doubt (or even when you know exactly what you’re doing), contact one of our helpful advisors and ask about a term life policy, which may be a good option. This type of life insurance covers you for a set amount of time (e.g., 20 years), during which the rate you agree on when you purchase the policy will be locked in as long as you pay your premiums on time. Term life insurance is typically the simplest and most affordable option for younger policy holders.


Fine, I’ll think about it. But isn’t applying for life insurance really complicated? I hate paperwork.


Life insurance doesn’t have to be complicated! In fact, that’s exactly why Our Life Covered℠ exists…because we saw the need for a simple, modern life insurance shopping approach designed with Millennial women in mind. At ourlifecovered.com, we offer a completely clickable journey with the option of online chat or phone support from our team of expert agents. So what are you waiting for? Get started with a free, personalized quote as soon as…right now!


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