Join Early Retirement Today
Reply
 
Thread Tools Display Modes
life insurance for your college kids?
Old 09-17-2018, 08:49 AM   #1
Full time employment: Posting here.
 
Join Date: Sep 2017
Posts: 816
life insurance for your college kids?

How many folks have their kids take out life insurance after college?

I am thinking of the exposure the parents have if they had to co-sign student loans. If something happens to the son/daughter then the parents could get hit with a sizable debt which could derail their retirement plans.

Also, if the adult child has their own LI policy, does the entire proceeds go to the beneficiaries ... or does their loan debt get automatically paid off first ??
__________________
“Earth is the insane asylum of the universe.”
― Albert Einstein
albireo13 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-17-2018, 02:14 PM   #2
Thinks s/he gets paid by the post
kaudrey's Avatar
 
Join Date: Feb 2006
Location: Alexandria, Va
Posts: 1,053
Life insurance proceeds go to the beneficiaries.
__________________
Two roads diverged in a wood, and I - I took the one less travelled by...
kaudrey is offline   Reply With Quote
Old 09-17-2018, 02:46 PM   #3
gone traveling
 
Join Date: Mar 2015
Posts: 3,508
Quote:
Originally Posted by albireo13 View Post
How many folks have their kids take out life insurance after college?

I am thinking of the exposure the parents have if they had to co-sign student loans. If something happens to the son/daughter then the parents could get hit with a sizable debt which could derail their retirement plans.
Depends on the specifics of the loan:
https://studentloanhero.com/featured...-when-you-die/

As always, if your demise would cause significant financial harm to someone else, then you should have insurance to mitigate that risk.

If you fall into that category, don't wait until after your child finishes college. And in general, don't co-sign loans.
joeea is offline   Reply With Quote
Old 09-17-2018, 02:51 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
isn't this an insurable interest issue?
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote
Old 09-17-2018, 03:06 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
Our kids have no debts and no financial obligations, so they don't need life insurance. I have strongly told them not to buy any life insurance from anyone without talking to me. College graduates usually get hit up by "friends" who could not find jobs except as insurance sales reps. I told them especially to avoid buying anything from such perps.
LOL! is offline   Reply With Quote
Old 09-17-2018, 03:21 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by Big_Hitter View Post
isn't this an insurable interest issue?
I don't think so.... I think that the OP is just asking if one should carry life insurance on their young adult children.

The answer is that if the death of your your young adult would cause you a financial burden.... for example, if you co-signed their college loans and would be responsible for paying them off and don't have enough money to do that or it would cause you a burden financially.

I never carried life insurance on our young adult children but there are some situations where it would be prudent to do so.... plus term insurance on people that age is dirt cheap.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 09-17-2018, 04:34 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 7,865
I have read that many student loans are discharged on the death of the borrower. I don't know if that is still true if there is a co-borrower or co-signer.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 09-17-2018, 04:41 PM   #8
gone traveling
 
Join Date: Mar 2015
Posts: 3,508
Quote:
Originally Posted by SecondCor521 View Post
I have read that many student loans are discharged on the death of the borrower.
That depends on the type of loan.

Quote:
I don't know if that is still true if there is a co-borrower or co-signer.
In most cases, the co-signer is still on the hook.
joeea is offline   Reply With Quote
Old 09-17-2018, 04:47 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Jun 2017
Location: Western NC
Posts: 4,609
Quote:
Originally Posted by pb4uski View Post
I don't think so.... I think that the OP is just asking if one should carry life insurance on their young adult children.

The answer is that if the death of your your young adult would cause you a financial burden.... for example, if you co-signed their college loans and would be responsible for paying them off and don't have enough money to do that or it would cause you a burden financially.

I never carried life insurance on our young adult children but there are some situations where it would be prudent to do so.... plus term insurance on people that age is dirt cheap.
I'd probably do it if I financed their graduate school education.

I have one who is still considering medical school after they fulfill their active duty service obligation.

They didn't qualify for one of the very few medical school slots direct after graduation.
ncbill is online now   Reply With Quote
Old 09-17-2018, 06:34 PM   #10
Recycles dryer sheets
 
Join Date: Jan 2016
Location: near Phoenix
Posts: 189
My DIL cosigned my granddaughter's college loan, she has life insurance on GD. Especially now that GD is into rock climbing and mountain repelling...….
calico1597 is offline   Reply With Quote
Old 09-17-2018, 07:08 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
Quote:
Originally Posted by calico1597 View Post
My DIL cosigned my granddaughter's college loan, she has life insurance on GD. Especially now that GD is into rock climbing and mountain repelling...….


Wow, that grand-daughter must be formidable if she can repel a mountain!

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 09-17-2018, 07:24 PM   #12
Moderator
 
Join Date: Jul 2017
Posts: 5,659
For us, no. Paid for college outright, and did not/ will not co-sign for any loans with them.

I did get after my son to take out life insurance for the benefit of his stay-at-home wife, and baby daughter.
__________________
Use it up, wear it out, make it do or do without.
MarieIG is offline   Reply With Quote
Old 09-17-2018, 07:25 PM   #13
Recycles dryer sheets
 
Join Date: Jan 2016
Location: near Phoenix
Posts: 189
oops - I meant mountain rappelling! She has hired with a company that sounds like a Dr. Phil boot camp. She takes troubled kids out for four days at a time, hiking, climbing, rappelling, camping. Proud of her, but I do worry...….I'm grandma, that's my job....
calico1597 is offline   Reply With Quote
Old 09-17-2018, 10:31 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,008
My parents signed me up for a 5K life ins policy when I was a baby.... I never heard them talking about how they could cash in on it.

Seriously, never cosign a loan.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline   Reply With Quote
Old 09-18-2018, 01:30 AM   #15
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,931
Quote:
Originally Posted by calico1597 View Post
oops - I meant mountain rappelling! She has hired with a company that sounds like a Dr. Phil boot camp. She takes troubled kids out for four days at a time, hiking, climbing, rappelling, camping. Proud of her, but I do worry...….I'm grandma, that's my job....
You should probably check the terms of the life insurance policy - it may be void for risky/dangerous occupations such as this. I know many forbid skydiving, being a pilot or flying as a hobby, and the like.

Quote:
Top 10 most common reasons for life insurance exclusions and loadings include:
.
.
.
6. Dangerous occupation
If you work in a high-risk profession, for example, in construction, or your job opens you up to specific hazards, like car accidents for taxi drivers, your policy may have an exclusion for claims related to these occupational risks.
.
.
.
9. Hazardous hobbies
Some extreme sports and activities are considered particularly dangerous and may be excluded, such as bungee jumping, mountain climbing, and skydiving. However, select insurers do provide coverage for dangerous past-times by opting to apply a premium loading.
njhowie is offline   Reply With Quote
Old 09-18-2018, 05:29 AM   #16
Full time employment: Posting here.
 
Join Date: Sep 2017
Posts: 816
Quote:
Originally Posted by Sunset View Post
Seriously, never cosign a loan.



Easier said than done. Aside from federal student loans, virtually any private student loan will want a co-signer.


We have 5 kids so, funding all of their college costs is out of the question for us. They have gotten virtually no aid to speak of. For 3 of the kids, their total financial aid through college was federal Stafford loans which amounted to < $2K/yr.
__________________
“Earth is the insane asylum of the universe.”
― Albert Einstein
albireo13 is offline   Reply With Quote
Old 09-18-2018, 05:46 AM   #17
Recycles dryer sheets
 
Join Date: Aug 2018
Posts: 91
The obsession over life insurance I just can’t comprehend.
Not for me or for my kids ever. I have a non working stay at home wife and 3 small kids.
Try selling it to me, no pitch is good enough
Beer-man is offline   Reply With Quote
Old 09-18-2018, 05:57 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,509
Quote:
Originally Posted by albireo13 View Post
Easier said than done. Aside from federal student loans, virtually any private student loan will want a co-signer.


We have 5 kids so, funding all of their college costs is out of the question for us. They have gotten virtually no aid to speak of. For 3 of the kids, their total financial aid through college was federal Stafford loans which amounted to < $2K/yr.
Not sure what your point is. Does this mean you are paying directly out of your savings, are the kids finding/earning most of the money, or what? I would have assumed you could have got loans if you tried.

OP - I think you have good advice. If paying off the loans you co-signed would harm you, then you likely should buy life insurance on the kids. Note this does not protect if you kids just don't pay the loans. I would get some agreement with the kids about how they are going to pay the loans. This should have been done before getting the loans. You may want to look at both term and whole life insurance. There are risks / rewards to each type.

Your risk is not just that the kids might not live long enough to pay the loan. They may run into problems and not pay the loan for a number of reasons that may not trigger a life insurance payment.

Just remember that you should be prepared to pay any loan you co-sign. The lender required a co-signer because the borrower did not have the credit.. you are the deep pockets.
bingybear is offline   Reply With Quote
Old 09-18-2018, 02:16 PM   #19
Thinks s/he gets paid by the post
njhowie's Avatar
 
Join Date: Mar 2012
Posts: 3,931
Quote:
Originally Posted by Beer-man View Post
The obsession over life insurance I just can’t comprehend.
Not for me or for my kids ever. I have a non working stay at home wife and 3 small kids.
Try selling it to me, no pitch is good enough
Unless you are financially well off, as the sole income earner in the family, being quite young at 34, should you unexpectedly pass away, that would leave quite a financial burden on your stay at home wife with 3 small kids to raise - don't you think?

For someone your age, you could pick up a $500,000 30-year term policy for about $400/year. That's an extremely small price to pay to protect your loved ones should something unexpected happen to you during your peak earning years - don't you think?

I'm not trying to sell it to you. I'm simply suggesting you consider what would happen to your family should you pass away sooner than expected?

To each his own.
njhowie is offline   Reply With Quote
Old 09-18-2018, 02:27 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by Beer-man View Post
The obsession over life insurance I just can’t comprehend.
Not for me or for my kids ever. I have a non working stay at home wife and 3 small kids.
Try selling it to me, no pitch is good enough
So Beer-man.... if you get run over and killed by a beer truck tomorrow.... how will your non-working SAH wife and 3 small kids eat and pay the mortgage?

Think it through before answering.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Leave Kids Life Insurance, IRA, or other Newventurer FIRE and Money 7 01-11-2017 11:52 PM
College Funding - what did you budget for your kids? Aiming_4_55 Other topics 64 04-26-2013 01:04 PM
Kids' college or retirement -- your advice wanted SecondCor521 FIRE and Money 73 04-23-2009 06:31 AM
Questions re: college costs, life insurance TuckerKatt FIRE and Money 11 06-19-2007 12:16 PM

» Quick Links

 
All times are GMT -6. The time now is 09:35 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.