Does Your College Student Need Life Insurance?

Life insurance is an essential part of every financial plan. Determining the best time to purchase it and the type of coverage to consider can be challenging. This article discusses whether life insurance should be on a college student’s radar and what factors to consider.

College students generally don’t need life insurance, but there can be exceptions. Students with cosigned loans taken before November 20, 2018, should consider purchasing a policy, as well as those concerned about future insurability or other financial obligations.

Which College Students Should Consider Purchasing Life Insurance?

• Students with a cosigner on loans before 2018 or loans that won’t discharge in case of death: If your lender won’t discharge the loan, you should get a term life insurance policy to cover it.
• Future insurability: Some clients find peace of mind in securing future insurability. By purchasing a policy at a young and healthy age, you can get a very inexpensive policy that can stay with you for up to 30 years.
• Dependents or others relying on your income: If you have dependents, consider purchasing a low-cost term life insurance policy.
• Living benefits: If you’re concerned about financial obligations if you become chronically or critically ill, some policies provide immediate benefits to help cover bills. This can also serve as an alternative to disability insurance, which can be harder to obtain with a low income or certain occupations.

Which College Students Should Not Consider Purchasing Life Insurance?

• Students with loans after November 2018: Most students who took out a loan with a cosigner after this date need not worry, as a law passed in 2018 requires lenders to discharge the loan in case of death. Double-check with your lender to confirm.
• College students being pitched “investments”: Young adults and college students are often pitched whole life, variable life, or indexed universal life products as savings or retirement plans. I don’t suggest purchasing a policy for these reasons without first consulting a CFP.
• Students with no other financial obligations: If you have no dependents or business obligations, life insurance may not be necessary.

How Much Does Life Insurance Cost for a College Student in NJ?

Like most things, it depends, but here are some sample prices for a typical term life insurance policy with living benefits:

Male – Age 20:

• $250,000
• 10-year term: $11.52 per month
• 30-year term: $20.68 per month

Female – Age 20:

• $250,000
• 10-year term: $10.58 per month
• 30-year term: $17.16 per month

What is the Process for Purchasing a Term Life Insurance Policy in NJ?

If you think it makes sense to purchase a policy, the process is quick and easy for most college students. If you’re working with Glenn Insurance, we will collect a few pieces of information to get started.

From there, the insurance company will ask you to complete a short online application and possibly have a phone interview. For a relatively healthy student with no significant health history, the policy will be approved within a few days.

For those with past health issues, insurance carriers may request doctors’ records and order a physical examination. This is all at no cost to you and helps assess your insurability. Depending on the requirements, the process can take from a few days to a few weeks.

Other resources

For more information on whether life insurance makes sense for your situation, contact Mike Sheeran at [email protected].

For more research on your own, Life Happens has great tools and articles on all things life insurance; It can be found at LifeHappens.org.