Reasons To Consider Student Life Insurance
Average student loan debt by borrower it is more than $ 30,000. This is why getting some form of student loan insurance is very important.
Unlike federal student loans, private student loan debt will not be canceled if the student dies before the loan is canceled.
Private student loans almost always require some type of co-debtor, who will be responsible for repaying the loan if the student dies while in school.
There is even the possibility that the lender will request immediate full payment if the student dies.
Obtaining a life insurance policy that more than covers your college period and enough coverage to cover the loan amount will protect any co-debtor of a student loan.
There are several ways that a parent can finance their childs education, such as a personal loan, a home equity loan, or a 401k.
If the student dies before they can pay off their debt, their parents will remain responsible and could lose their home or ruin their credit.
Nobody likes to pay for something they will never use , so there really isnt a reason to go without life insurance for your student.
To protect your dependents
One thing that most people dont consider is the fact that some college students have children and need to protect their well-being.
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What Is Life Insurance And Why Is It Important
A life insurance policy is a contract between you and a life insurance company that helps financially protect your loved ones if you pass away. When you pay the monthly or yearly premiums associated with a life insurance policy, you help increase your loved ones long-term financial security.
If you die while the contract is in place, the insurer pays a death benefit to your beneficiaries. The money from a life insurance death benefit can be used to help pay for important final or daily expenses like a funeral, mortgage, childcare and more. Its your familys financial safety net if they have financial obligations they need to cover.
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Compare Life Insurance Quotes
Its not enough to get a single quote. Shop around. As you start to compare the quotes, you might be shocked by the extremely wide range in price.
While the price is an important factor, you need to look into the specifics of these quotes. Find the differences in the policies to determine which one is best for your situation. A few things to look out for include:
- Fixed or variable premiums
- Start date of the policy
- Any cancellation policy
Gather Information To Speed Up The Process
You can make the application process as seamless as possible by having important information on hand before you apply for life insurance. None of the following documents are required to apply for life insurance, but may help speed up the initial phone call. These include:
Proof of identity, citizenship, and age. A driverâs license, Social Security number, birth certificate, or a valid passport will work. Noncitizen residents can use their green card or an employment authorization card.
Proof of income. You can use pay stubs, a letter of employment, a tax return, or an earnings statement from your bank. If youâre unemployed, an unemployment letter or monthly statement describing your unemployment benefits will work.
Proof of residency. For renters, that could be your signed lease or a rent receipt. For homeowners, your mortgage bill or a property tax statement will suffice. Insurers will also accept a utility bill or a postmarked envelope with your return address on it.
Insurance companies do not collect any of the documents listed above, but it’s a good idea to have this information ready to avoid unnecessary time on the phone call.
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Get Some Anonymous Quotes And Comparison Shop
Once you understand who will own the policy, how much coverage you will need, and for how long, its time to start shopping around.
Getting life insurance quotes online is very easy however, be sure to provide the least amount of information while you are in the quote stage. You just need an idea of what your price might be, and you dont need 1000 agents to call you just because you want to see the price.
Be sure to compare apples to apples The length of the policy terms and the amounts of coverage must be the same. Once it matches, its time to see the benefits and features of the policy by checking out some reviews.
Buying Term Life Insurance Online Has Never Been Faster Easier Or More Affordable Heres How To Do It
On the one hand: In the 21st Century, its not exactly news that you can get a life insurance policy through the magic of the internet.
On the other hand: If it were as simple as, say, stocking up on household supplies from your favorite e-commerce site, this article wouldnt exist.
So lets start here. Buying affordable term life insurance online is marginally more complicated than ordering, say, paper towels or laundry detergent. But its still easier than its ever been, and this guide will show you how to do it, from when life insurance is important to making the key decisions that will help take care of your loved ones in case something should happen to you. By the time you finish reading this article, youll be well on your way to experiencing that peace of mind.
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Six Reasons Why To Buy Life Insurance
You buy life insurance because its the best way to protect your loved ones. Its a financial decisionkind of. Its an emotional decisionsort of. Its about love and caring and the futuremost definitely.
Still, millions of people buy life insurance every year for reasons that are often difficult to express. At the same time, the reasons are simple and obvious. Thats the thing about life insurance. The idea may be simple, but the reasons behind it cut deep, to our very corealmost to an instinctive level.
At the heart of it, if you’re like most people, you buy life insurance for six very good reasons.
- Life insurance is about taking care of loved ones.
Its about meeting responsibilities and keeping promises. You view your decision to purchase life insurance from your family’s point of view, not your own. You see life insurance as a tool that protects your spouse and children from the potentially devastating financial losses that can result if you die prematurely.
- Life insurance is for the living.
It’s not about you. You know that, should anything happen to you, the life insurance you have purchased is in place to protect and provide financial relief for those who must carry on without you. Its about them.
- Life insurance is an expression of love and caring.
Because you care about your family, you want to ensure the financial security of family members if youre suddenly not around to provide it.
- Life insurance buys time and options.
Do Both Spouses Need Life Insurance
Life insurance policies are designed for individuals but if youre thinking about taking out a policy, your partner should probably take out a policy, too.
Why? Because if youre at the stage in your life when you have the kind of responsibilities that make you wonder whether its time to take out life insurance, well your partner is probably at that same stage in their life. Maybe you bought your first home together. Maybe you had your first child. Maybe youre working on paying off your student loans, and wondering what might happen if you die before your debts are paid in full.
Dont make the mistake of assuming that only the higher-earning spouse needs life insurance. That kind of thinking is what got us into our current life insurance gender gap, in which men value their lives financially nearly twice as much as women do even though both men and women bring financial value to a partnership that often goes above and beyond the dollar value of their earnings. This is one of the big reasons why stay-at-home parents need life insurance.
Ask yourself how much money it would cost to replace not only your spouse or partners salary, but also all of the homemaking and caregiving work they contribute. Then ask yourself why you arent both considering life insurance.
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There Are Two Kinds Of Life Insurance:
Term life insurance temporary, lower-cost insurance coverage, at least initially, which you buy for a set period. When that times up, coverage can be renewed or converted to permanent, lifelong, coverage without having to answer further health questions.
Permanent life insurance typically costs more, but lasts a lifetime and includes features that can grow money inside your policy over time, called cash value. You can access this money while youre alive or leave more money for those you care about.
Once you know what type of life insurance you want, youll then want to determine how much your family will need to continue their lifestyle after youre gone.
To start, add up your:
- Monthly household expenses groceries, bills, mortgage, loan payments, etc.
- Planned expenses – RRSP or contributions to your children’s education, for example
- Expected one-time costs – funeral expenses
With an idea of expenses for a full year, then multiply that by how many years your loved ones would need to rely on this money. Its a good starting point to get an idea of your insurance needs. An advisor can help you finalize this.
Calculate How Much Life Insurance You Need
There are two important questions to ask:
- What financial resources will be available to survivors after your death? For simplicity, consider three categories of resources: Social security and other retirement-related survivor benefits group life insurance and other assets and resources. It is also important to know when these resources will become availablefor example, social security survivor benefits are payable immediately to a surviving spouse with dependent children, but only after age 60 if there are no children.
- What financial needs will your survivors have after your death. For simplicity, consider three categories of requirements: final expenses debts and income needs.
Then subtract your survivors financial resources from their financial needs to determine how large a policy to buy. Many people are underinsured, often because they skip these steps or take a shortcut . For more help in determining the right amount of life insurance, see: How Much Life Insurance Do I Need?
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Request Multiple Life Insurance Quotes
Once you have selected a handful of potential providers, get quotes from each company. Most companies do not include the price of premiums on their website, so getting quotes will help you determine which provider can give you an affordable rate. Most major life insurance companies have an online quote generator that allows you to get an instant rate quote right from the website. If not, get in touch with an agent.
When you request to receive a quote, you will typically be asked to provide some personal information, including your age, address and gender. Additionally, you will likely need to submit basic information about your medical history. Usually, you are asked about your lifestyle, smoking history, past surgeries and medications you are taking. Generally, there is no need to submit official medical records to get a quote. The insurance company will then use the information provided to calculate your rate.
Take A Life Insurance Medical Exam
As I mentioned earlier, the most affordable term life insurance is whats called medically underwritten life insurance. These kinds of policies require proof of your current health, which often means taking a life insurance medical exam.
If you dread the thought of a medical exam, youll be glad to know that the process is really simple. The exam usually takes less than 30 minutes, and it can often be completed at your home or workplace.
However, thanks to recent underwriting innovation in the life insurance industry, it may not be required for qualified applicants to take a medical exam. Haven Life offers the InstantTerm process in which some applicants ages 1859 seeking a $1 million death benefit or less might meet the criteria that allows them to finalize coverage without a medical exam, based on the information they provided during the application process.
Whether you qualify for InstantTerm or end up taking the medical exam, medically underwritten coverage will generally provide you with a wide range of coverage options and better pricing than youd get from a no-exam life insurance policy.
Additionally, with simplified issue policies, maximum coverage amounts are usually limited to $500,000 or less. Here are some examples of the cost of coverage for a Haven Simple policy, issued by C.M. Life Insurance Co., a MassMutual subsidiary, for nonsmokers in excellent health.
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Decide How Much Coverage You Need
Historically, insurance experts suggested multiplying your income by 10 to settle on an amount for life insurance coverage. However, because this approach does not consider the specifics of your financial picture, such as how many individuals you may want to leave care for or your debt to asset ratio, other methods have since been proposed.
One popular method is the DIME formula, which takes into account your debt and final expenses owed, total income based on what might be needed after your death, the amount left on your mortgage and any outstanding or expected expenses for schooling. With these considerations in mind, you may be able better calculate how much coverage is necessary to sustain your family.
The number you settle on for coverage will depend on several factors, including whether or not you have another spouses income to consider. In general, it could help to factor in funeral costs and the age of your loved ones to determine how much income replacement might be necessary.
Medical Exams During The Pandemic
Under normal circumstances, before the pandemic hit, you would need to have a medical exam to get a whole life policy. You would answer a series of questions about your health, health history, and medication. Typically a medical examiner would come to your home and do an exam. Often they take a blood and urine sample and get some basic health data about you.
In some states where restrictions have been more significant, medical examiners cant come into homes. They are still allowed to do this in other places but with all the necessary safety precautions in place. They will, of course, want to ask some questions whether anyone in the house has been or is currently sick.
There are a few companies that are even opting to waive the medical exam. If you can find a company willing to waive an exam, now is the time to apply. Having said that, just because you apply, dont assume you have the policy locked in. If you are in a high-risk group, the life insurance company may ask you to wait until an exam is available before approving your policy.
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Prepare For Your Medical Exam
Most life insurance companies will require a medical exam that typically includes a blood draw and urine sample. Because people tend to be more relaxed at home, try to get the examiner to come to your residence – if possible. Be sure to follow any instructions regarding how you should prepare for your exam .
The decision to purchase life insurance for the first time is an important one. If you have questions along the way, don’t hesitate to reach out to the insurance company or contact a financial professional.
*As long as required premium payments are timely made.
All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.
Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.
Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.
What Kind Of Life Insurance To Buy
Term life insurance is the only kind you should consider.
Term life insurance is cheaper and for 99% of people term life is the best financial decision when buying life insurance.
The insurance industry earns big profits and their agents big commissions from products known as whole life insurance, universal life insurance, or cash-value life insurance. But for most people, anything other than term life insurance is a bad deal.
Term life insurance is easy to understand because it works just like your car or homeowners insurance. For every year you pay your term life premium, youre covered. If you die within the covered period, the policy pays a death benefit. When the policy expires or you stop paying your premium, the coverage ends.
Term life insurance is also relatively cheap. For example, a healthy 20-something might be able to buy a $1 million 20-year term life insurance policy for $500 a year. A smaller policy say $250,000 might cost just $15 or $20 a month.
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