Do College Students Need Life Insurance?


If you have had life insurance on your college-age children since they were young, this question won’t apply to you. But if you don’t have coverage on them, or if you are contemplating terminating the policies that you have, you may want to give the matter’s more thought.

This is especially true since college students are in that statistically dangerous age range of 18 to 25. This can mean that having life insurance coverage is more important at this age than it has been at any time before.

A simple term life insurance policy will get the job done. Though many people think in terms of having the investment feature that comes with whole life insurance, simply having the most coverage at the lowest possible price should be your primary objective.

Let’s get back to the specific reasons why you should have life insurance on your children if they are college students.

The usual reasons for life insurance on anyone

You should have a life insurance policy on anyone in your family, especially if they are within the realm of your responsibility. Just as you have life insurance on your own life, and for your spouse, you should also have it for each of your children – especially those who are in college.

You will need to be prepared to cover any costs related to final expenses. There may also be outstanding medical bills that were not covered by health insurance. You’ll have enough on your plate without needing to worry about all of the expenses that result from a lost loved one. At a minimum, you should have at least enough insurance coverage to handle all of these expenses.

Lingering student loans

Generally speaking, government-sponsored student loans are automatically canceled upon the death of the student. But this may not be the case if some or all of the student loan debt is issued by private sources, such as banks.

Every loan has its own set of terms, and you’ll have to be familiar with this provision as it relates to any student loan debt you have, particularly if it’s private. Since student loans typically require that you as the parent cosign the loan, there’s more than a remote possibility that repayment may be enforced against you at a later date.

Even if your child’s student loan debts will automatically be canceled upon death, it’s still good to know that you’ll have a back up plan just in case they aren’t. A good term life insurance plan will give you just that.

Non-student loan debt you may have accumulated to pay for college

Non-student loan related debts are actually a bigger concern than student loans themselves. Many parents incur liabilities in order to help their children complete their education. This can come in the form of credit card debt, home equity lines of credit, 401(k) loans, and even cash-out first mortgages. None of these debts will automatically cancel in the event of the death of your child.

If you can afford to, you should make sure that the life insurance policy that you have on your college aged child is sufficient not only to pay for final expenses, but also for any school related debt that they or you have incurred, whatever the source.

Even though the debt was incurred for the purpose of educating your child, it will still represent a lien on the future of you and your entire family. Life insurance is the very best way to extinguish those debts, and enable you to move forward with the rest of your life.

Money to cover a time of grieving

This is a theme that I touch on very often in regard life insurance. Life insurance isn’t just about settling the final expenses of the deceased loved one, but it’s also about providing financial breathing room for you and your family in the aftermath. This is one of the biggest benefits to having life insurance.

The death of a loved one brings about a time of prolonged grieving. It can often be difficult for a family to continue to operate in anything like normal. Time and money may be lost in earning income, there may be money required for counseling and medications, and perhaps even a need for travel or other diversions that will help you and your family to recover from your loss. Life insurance provides you with the funds for all of those options.

An adequate life insurance policy should be able to cover all of the contingencies that might present themselves in the event of the death of your college-age student. The peace of mind that you will gain as a result of having this coverage will be well worth the price that you need to pay for it in premiums.