By Jennifer Hamel, Brown & Brown of Detroit Personal Insurance Advisor
Due to continuously rising college tuition rates, the cost for students to advance their education is steeper than ever before. Many college students are considering all of their options when securing financing for their educational needs. Parents often assist their student by co-signing on private student loans.
When co-signing on any loan, a person takes responsibility on a debt if the primary borrower does not fulfill their obligations. Did you know this can also apply to private student loans? Not all private lenders forgive student loan debt when a borrower passes away. In addition, student loans are not typically included in bankruptcy.
Using life insurance for student loan debt ensures that the co-signer will be protected in death. Typically a college student is in good health and purchasing even a 10-year term policy for the amount of the loan will ensure that the debt will not be passed onto the co-signer. Due to the age/health of a typical college student this is also a great time to consider locking them into a longer term policy or a whole life policy.
The life insurance policy can be set up one of two ways. The first is that the student owns the policy and names the parent/student loan co-signer as the beneficiary. The second is that the parent is the owner of the policy and list themselves as the beneficiary.
In a time of unexpected loss, life insurance can give peace of mind that tuition debt is covered.
Feel free to contact us at 586-977-6300 with any questions relating to personal risk management. Brown & Brown of Detroit strives to provide well-rounded solutions to protect your lifestyle.