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If you have any amount of private student loan debt, having life insurance is essential to ensure your cosigner would not be on the hook for that debt if you were to pass away unexpectedly.
Getting term life insurance is a simple and affordable way to ensure that your loved ones are protected from inheriting your debts, and rates can be as low as $20/month – it’s a win-win.
While federal loans are forgiven upon death, most private student loan companies will hold your cosigner or family members accountable for any loan debt you leave behind. If your private lender doesn’t offer student loan death forgiveness, you must have a plan in place to protect your loved ones from facing this financial hardship.
In certain states, your spouse may be responsible for your student loans. Some states classify student loan debt as marital property even if the spouse did not cosign the loan. While this is rare, it’s important to know the ins and outs of your loan so you can prepare for whatever life brings.
For those with private student loans, it makes sense to get a term life insurance policy. Term life insurance is affordable, customizable, and can last for a set number of years.
Term life insurance is the most affordable type of coverage with the most customization available. Term life, which lasts for a certain number of years, offers financial protection during the years you expect to be paying off your student loans.
Terms range from 10,15,20-30 years and your coverage amount can be customized to match your loan amount.
As long as you pay your premiums on time, your term life insurance policy stays active until the term is up. If you pass away during this term, your loved ones (aka the cosigner on your student loans) would receive a lump sum (the coverage amount) that they can use to pay off the remainder of your student loans – and other debts if necessary.
Young and healthy individuals can qualify for a term life insurance policy for as low as $20/month. Your coverage would allow you to have peace of mind for years to come, knowing that your loved ones wouldn’t be on the hook for a hefty loan payment if you pass away.
Even more, you could add a return of premium rider to your coverage which would provide a full refund of the monthly premiums you paid into your policy over the years if you didn’t need to use your policy at the end of the term.
When you purchase a new term life insurance policy, you’ll need to select a beneficiary. This is the person who will receive the death benefit of your policy when you pass away.
For those with private student loans, naming the cosigner of the loan as your beneficiary makes the most sense.
It’s important to choose someone you trust and be sure to let your loved one know that they are listed as your chosen beneficiary.
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