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How Life Insurance Can Pay Off Student Loans

Student Loans and Life Insurance

As a parent, you never want to consider what you would do if your child passes away. However, it is important to keep in mind that sometimes the worst situation imaginable does happen. If your child had taken out student loans to pay for college, and they pass away, you may be even more devastated to learn that you would have to take on their debt. Investing in a life insurance policy for your child can help to make sure that you are able to pay off that debt.

While federal loans are discharged if the borrower dies, private loans that are cosigned are not. In the event of the borrowers death, discharging the debt is completely up to the lender. Private lenders do not have to meet federal requirements to help the borrower after they pass away. However, as a cosigner, you may be able to negotiate a lower balance, smaller monthly payments, or lower interest rates.

Before you sign on the dotted line for your child’s student loans, make sure that they have the right life insurance protection that will make you the beneficiary. Since most college students are relatively young, the premiums on the policy will be very inexpensive, especially with a term life insurance policy. While you could invest in a whole life policy that will provide financial protection for their entire life, a term life policy will provide the financial cushion that you need if your child passes away unexpectedly before they can start making payments on their loans.

Contact the insurance professionals at Michelle Lim Insurance Services Insurance in Alhambra, California for all of your life insurance needs. As an independent insurance agency, we will work with you to make sure that you have the protection that you deserve, all at the right price.

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