As the cost of higher education rises, families turn to loans to send their children to college.
Shock statistics from the Consumer Financial Protection Bureau state that as of the end of last year, outstanding student loan debt was more than $1 trillion. Are you the parent of a college-going child?
Have you co-signed a loan to cover the cost of your child’s education and if so have you taken out life insurance in your child’s name to settle that loan in the event of his/her death?
Think about it this way. Like any other parent you want the best for your child and that includes a tertiary education.
You are happy to co-sign a student loan because you know that your child will work to pay back the loan once they have completed their studies. But then one day every parent’s nightmare becomes reality and your child passes away before he or she can pay back the loan, perhaps even before he or she can finish studying. What now? Because you co-signed the loan you are responsible for paying back what is owed.
This is where life cover steps onto centre stage. If you take out a life insurance policy in your child’s name you know that if he or she passes away their life insurance policy will pay the policy beneficiaries a lump sum amount. These funds can be used to pay off outstanding debt, including student loans, store cards and credit cards. The money can also be put towards funeral expenses as well as the costs of settling your child’s estate.
No parent wants to think about the death of his or her child. For many the thought of their child dying before them is too horrific to even contemplate. But as responsible adults we have to plan for the worst and ensure that we are financially protected against the death of our child. Think of it this way. If your child passed away and you assumed responsibility for his/her student debt how would you cope with the repayments? Would you be able to afford them? How, for example, would this unexpected financial burden affect your retirement plans?