Anyone take out life insurance on their kids?

[MichaelB]

I think you need the insured’s consent and an insurance interest. The interest is clear. Have you discussed this with them?

 

[kgtest]

I pay for life insurance so that it covers the liabilities (including signed notes) plus a stripend for the loved ones I've directed as beneficiaries. So if I passed, my beneficiaries would benefit but my liabilities would need to be covered...hence the Life Insurance.


Now, do I have enough TODAY in that policy to cover living expenses for 3 people for 18years, then another 8 years of college...NO, I am still accumulating, but at least my loved ones would not be burden with a mortgage and would have some money that could accumulate into more.

I don't see the point in paying for life insurance once you have zero liabilities and a sizable nest egg and the kids are grown and earning there own livings. But that is me, some would disagree.

 

[ziggy29]

I don't see the point in paying for life insurance once you have zero liabilities and a sizable nest egg and the kids are grown and earning there own livings. But that is me, some would disagree.

We have a couple of 30-year term policies, taken out in 2003 when we were in our 30s. The premiums are low -- much lower than we could get now, obviously -- and are locked in until 2033. We probably don't strictly *need* them now, but for what we are paying at our age, I think we'll keep them to help out a little should one of us pass before then. If one of us did pass, I'm sure the other would then cancel the remaining policy on their self, especially since we have no heirs and most of our estate will probably go to charity.

 

[robnplunder]

I have been advised to take out life insurance policies for them, or have them do it. Have to plan for contingencies.

This does not sound like a good advice. What is the likelihood of a young person die, or multiple ones die? Unless you know there is a high likelihood, this is a waste. The bigger likelihood is for your "alive" children to unable to pay off their loan on time. That's the part you need to have some contingency. My opinions, of course.

 

[MichaelB]

This would put a crimp in our retirement (an understatement).

I think this is the key phrase. Life insurance is appropriate not because of the likelihood of premature death but because the financial consequences are catastrophic.

 

[gwraigty]

This does not sound like a good advice. What is the likelihood of a young person die, or multiple ones die? Unless you know there is a high likelihood, this is a waste. The bigger likelihood is for your "alive" children to unable to pay off their loan on time. That's the part you need to have some contingency. My opinions, of course.

+1

 

[Ginny]

I knew someone that co signed a law school loan and got the student's life insured who then skateboarded into his early demise. Whew!

 

[pb4uski]

I think you need the insured’s consent and an insurance interest. The interest is clear. Have you discussed this with them?

No, you do not need the insured's consent.... all you need is an insurable interest.

 

[pb4uski]

I think this is the key phrase. Life insurance is appropriate not because of the likelihood of premature death but because the financial consequences are catastrophic.

+1

 

[pb4uski]

Now that I'm 1 yr away from retiring, I'm looking at my adults children who have student debt. I am co-signer on a bunch of student loans so, if anything happens to them (God forbid) I am on the hook for their debt.
This would put a crimp in our retirement (an understatement).

I have been advised to take out life insurance policies for them, or have them do it. Have to plan for contingencies.

Has anyone else taken this step?

Thx,
Rob

Unless it is enough money to cause you trouble if one of them should die, let it be. The optics are bad. And the chances that any of them would die are very low.

Ha

Ha... the OP indicates that it is enough money to put a crimp in their retirement.

 

[HarveyS]

If I were in your shoes, I would get an insurance policy to cover the loan. Agree with the earlier post that disability should be insured as well. It is likely that the cost of insurance will be low as the risk of loss is low. I would want to get this risk covered for a low % of the debt.

For those of us with young kids and are not in your shoes (yet), I would not co-sign a loan - not even for education.

 

[flintnational]

Quickquotes.com indicates a 25 yo can get a $100k, 10 year term policy (preferred rate) for $83 per year.

As others have said, if it will materially impact your retirement, I would get the insurance.

 

[MissMolly]

No, you do not need the insured's consent.... all you need is an insurable interest.

When I Google this question everything I read say you DO have to have their consent.

 

[pb4uski]

That does seem to be the case, but it could create a quandry like in this case where the parents have an insurable interest because of they co-signed on the loan and if for some reason the adult child refused to allow consent (for example, if they had some sort of falling out after the parents co-signed for the loan).

 

[kgtest]

You all made me double check the policies. Each of our kids (1 and 3) has 20k of Life Insurance. I personally don't see any need to adjust that up at this point. Neither of them are indebted and possibly never will be?

 

[gwraigty]

When I Google this question everything I read say you DO have to have their consent.

Yes. This makes sense. Here is one article that specifically mentions the OP's situation:

"The person whose life is insured must sign the application, giving permission for the insurance company to collect data, such as motor vehicle records, prescription drug records and information submitted on previous health and life insurance applications. And, often, the person has to undergo a life insurance medical exam as part of the application process."

https://www.nerdwallet.com/blog/insurance/life/guide-to-buying-life-insurance-on-someone-else/

"You co-signed a loan: The lender will come after you if the borrower dies. If repaying the loan would be a hardship, then consider buying life insurance on the borrower and naming yourself as beneficiary. An exception is federal student loans, which are discharged if the borrower dies. Whether private student loans are forgiven when the borrower dies depends on the lender."

 

[Moemg]

My son died suddenly at 31 and he still had student loans . They hounded us until we proved beyond a doubt He had passed . Apparently students fake their death to get out of paying student loans . Take out the insurance .

 

[albireo13]

I haven't talked with the kids yet on it. Still deciding on the path to take. I think it makes sense. We have 5 children and their student debt will be around for decades after college. The likelihood that something bad happens is not insignificant.


Some is federal student loans but a bunch (>50K so far) is private where I had to cosign.

 

[gwraigty]

I haven't talked with the kids yet on it. Still deciding on the path to take. I think it makes sense. We have 5 children and their student debt will be around for decades after college. The likelihood that something bad happens is not insignificant.


Some is federal student loans but a bunch (>50K so far) is private where I had to cosign.

As posted above, unless your kids give their consent to you taking out life insurance on them, you'll have to take the path of hoping they pay off their student loans themselves. Although, I don't know why they would object, since you'd be paying the premiums.

 

[isisdave]

You need an "insurable interest" to be the owner of the policy, and you'll need the child's consent to apply for one. But if you're obligated on the loan, that should be enough, and you should be the owner so the child can't change the beneficiary to anyone else. If you buy 10-year term for the amount of the loan on a 21-year-old, it shouldn't cost much at all.

On a different tack, back in '49 my parents bought a policy with face value of I think $10,000, and it was single-premium term until age 30. The good thing is that it permitted me to buy $10k more at 21, 24, 27, and 30, or at marriage anytime, without evidence of insurability. This could be very important if the child becomes injured or disabled or develops illness before adulthood. It was very very cheap. I think Gerber baby food company promoted it. I bought something similar for my child in 1970. I imagine there's something similar today.

 

[charais]

What about consolidating the loans and doing a refi? You might be able to get a lower rate and also get your name off the loan. I think I got a mailer from Navy Federal a few days ago offering student loan consolidation at 4% rate. YMMV

 

[Teacher Terry]

Moemg, I am so very sorry about the loss of your son. My friend lost her daughter at 19. It’s so hard.

 

[albireo13]

What about consolidating the loans and doing a refi? You might be able to get a lower rate and also get your name off the loan. I think I got a mailer from Navy Federal a few days ago offering student loan consolidation at 4% rate. YMMV

I was suggesting to my son to pursue a refi once he graduates, to consolidate.
Question ... can he refi right after graduating without needing a co-signer?
I am assuming he could be employed right away.