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When A Student Borrower Needs Life Insurance
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If you're young, healthy, and have no dependents, you might think that you don't need Life Insurance. However, if you have taken out private student loans you might buy a Life policy to repay this debt.

Although federal student loans allow a "death discharge" which releases the borrower's survivors and heirs from responsibility for the debt, private lenders generally require repayment by the borrower's estate. What's more, most private loans involve a co-signer who is legally obligated to pay this debt - and if the borrower is married, the surviving spouse could even be held responsible for it.

If you have student loans from a private lender, review your loan papers to determine the consequences for your family should you die before the debt has been repaid. You can protect your co-signer(s) and/or spouse by making them the beneficiary of a Life policy that covers the loan debt. Students under age 40 who need less than $500,000 in coverage can apply for Term Life Insurance. If you have your parents as co-signers, and decide later that you want to protect your spouse, you can just change the name of the beneficiary.

A small Life Insurance premium can be well worth the extra peace of mind for your co-signer(s) or spouse.

There's no cut and dried answer on using Life Insurance to repay private student loans. Our agency's specialists are always ready to offer their professional advice based on your individual situation.

Shawna Kreis
Other articles by: Shawna Kreis
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