When a young adult takes on a private student loan, a cosigner often signs on—usually a parent or guardian—to guarantee repayment to the lending institution. How widespread is this practice? During the 2023-2024 academic year, 93% of all private student loans had co-signers. The total amount of these private loans is in the tens of billions!

Most people don’t realize that if the student or cosigner were to pass away unexpectedly, the other becomes fully responsible for the remaining balance of the loan. In some instances, private lending institutions could demand immediate and full repayment.

That’s where life insurance comes in. Life insurance for students or their cosigners ensures that the loan is covered in the event of death, protecting families from financial stress and damaging consequences.

Key benefits of life insurance in this situation can be:

• Protects loved ones from an unexpected burden of unpaid student loan debt
• Ensures the student’s dreams aren’t derailed by tragedy
• Prevents damage to credit history due to unpaid debt
• Provides peace of mind for both student and cosigner

As agents, you can open conversations by asking: “Have you considered what would happen to the student loan if something unexpected happened to you or your child?” It’s a simple question that uncovers a serious need—and a policy that safeguards both the student and the cosigner.

Source: USAToday.com - Sep. 29, 2024