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Whether you’re in college or you have children that will go to college, you should be thinking about life insurance. Term life insurance is designed to replace income if you were to die unexpectedly. Parents who want to send children to college need life insurance and if you’re a student whose parents co-signed loans for you, then you may need life insurance too. Let’s take a closer look at these situations.

Life Insurance for Parents of College Students

Life insurance is crucial for parents to ensure your children are taken care of financially if you died unexpectedly. College is an investment in your children’s future and if you plan on paying for it, or contributing to it, be sure to take into consideration the cost of tuition when buying life insurance coverage. A $100,000 term life insurance policy will take care of funeral expenses and a good portion of the mortgage payments, but it won’t go very far in paying for college.

In a survey conducted by Sallie Mae, on average, families spent $26,226 on college for the academic year 2018 – 19. Families borrow money via loans to help pay for a good percentage of college.

graph illustrating how families pay for college

Paying for college through personal savings is the least expensive way to pay for college. This avoids interest accumulated on borrowed loans, which adds up quickly. Parents, start saving early if you plan on paying for your children’s tuition. College isn’t cheap. From the late 1980s to 2018, the cost of an undergraduate degree has risen by 213% at public schools and 129% at private schools, adjusting for inflation.

If this trend continues, Forbes predicts that in 2025 the total cost of tuition and fees will be between $65,590 (in-state public tuition) and $224,124 (private). That’s a lot of money. 529 plans are great accounts to invest in to help you save for your children’s college years and life insurance will be there if you die too soon and still want to ensure their tuition is covered. Our life insurance needs calculator is easy to use and very helpful in determining how much life insurance coverage you may need. Give it a try.

Term life insurance is very affordable and if you’re a college graduate whose parents helped you pay for college by co-signing loans, a term policy will cover the loan amount if you were to pass away.

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Life Insurance for College Students

Grants and scholarships don’t always cover the entire cost of tuition and some parents will opt to co-sign private loans for their child. If parents co-sign, this means they are responsible for the debt if their child does not or cannot pay off the loan.

And some parents borrow on behalf of their children’s education, but many of them expect the child will eventually help repay those loans. Of those surveyed in the Sallie Mae report, whether the parent borrows the loan or the student does, only 27% of parents plan on being solely responsible to pay what’s due.

graph illustrating who is responsible for paying off student loans

Term life insurance is very affordable. If you’re a college graduate who received help from a parent to pay for your education, a term policy can cover the loan amount if you were to pass away before it’s paid.

The sooner you buy life insurance, the less expensive it is because of your age. You also likely do not have too many health issues. As you get older and medical complications creep in, it may affect the cost of life insurance.

Estimated Monthly Cost of a $250,000 30-Year Term Life Insurance Policy for Healthy People in Their 20s and 30s
AgeMaleFemale
25$18.46$15.27
26$18.66$15.46
27$18.78$15.68
28$18.92$15.93
29$19.10$16.20
30$19.25$17.35
31$19.65$16.92
32$20.16$17.35
33$20.70$17.75
34$21.26$18.29

In addition, if you plan on having a family, buying life insurance young may be a very smart move so you are able to get a large policy for very little money per month. As an example, a healthy 24-year-old male can purchase $500,000 in coverage that will last 30 years for as little as $31 per month. Even if this individual doesn’t have his first child until he’s 35 years old, his policy will still cover him until his first child turns 19.

If you buy a policy now while you’re young and determine later on that you need more coverage, you can layer policies. As an example, if you purchased a $100,000 20-year term policy as a graduate to simply ensure your parents can afford to pay off the co-signed loan and your funeral expenses if you were to die, but ended up having a family a few years later, you can purchase an additional policy, such as a 20-year $250,000 policy for more coverage. This strategy is called laddering life insurance.

Another option would be to convert the term policy into a permanent one. Most term policies have a conversion option but this route is far more expensive.

If you have any questions regarding life insurance, contact us here at Quotacy because we would love to help. If you’re ready to start shopping for life insurance, head on over to our term life insurance quote tool. It’s easy to use, you don’t need to enter any contact information unless you decide to buy. You’ll instantly be able to view quotes from multiple life insurance companies. After you send in your online application, your dedicated agent will review everything and make sure you get the best final price.

 

Photo credit to: Aaron Hawkins

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Writer, Editor, and Co-Host of Quotacy’s Q&A Friday YouTube Series

Natasha writes and edits content and is co-host of Quotacy’s YouTube series. She is also working toward her Chartered Life Underwriter (CLU) designation. When not working or studying, you’ll find her throwing a tennis ball for her pitbull mix, Emmett, or curled up on her couch watching Netflix. If it’s football season, the Packers game will be on.