<p>Hello, all</p>
<p>Just received one of those mail offers for student whole life insurance from “Globe Life and Accident Insurance Company”. Was just about to toss it without another though, but then… started thinking. For $6.74/month (locked in for life, or so they say), my son could have $10K life insurance. Does anyone know anything about these insurance companies or if this is a good idea to take advantage of?</p>
<p>Waste of money at this age. Even if the college loans are in his name, 10K isn’t going to cover much. To me, its like those silly life insu offers you get from Gerber’s when your kid is born. I really think there are better ways to invest your $$. Just my 2 cents.</p>
<p>Buy term insurance, because there is more value, guaranteed renewable, and it is only pure insurance. </p>
<p>There is a legitimate reason to get life insurance-which really should be call, life income protection. We, parents, have life insurance for the obvious reasons but life insurance for a college student may not so clear. </p>
<p>We have insurance on the kid because.
<p>6) $250,000, 20 year term, approximately $25/mn. beats the whole life program.</p>
<p>The insurance is not for our kid. It is for us, the parents. </p>
<p>Hope this is clear?</p>
<p>itstomuch raises good points on the value to the parents’ piece of mind…but, from an actuarial standpoint, LIFE insurance on kids is a lousy investment, except for the agent. A $250k policy today will be worth much, much less in 40-50 years when the kid is likely to die.</p>
<p>Typically, adults buy insurance to protect an estate, to protect a spouse to raise the kids, to protect kids future housing and educ choices if one spouse is gone, etc – to protect current income streams for the remaining family membrs. However, a underage child has no current income, and protecting against future income for a future college and for a future spouse for future kids just doesn’t make sense IMO. To be blunt, if a child dies, the dollar costs to the family are the service and burial – that’s it. Of course, the emotional costs are stratospheric, but insurance doesn’t cover that issue. </p>
<p>OP: long-term financially, your S would be better off if you took the $7/mo and put it into an equity fund.</p>
<p>However, should you decide to look into insurance to say cover college loans in the parents name (anyone know what happens to a kids loans if they die?), I second the rec for TERM life, but I’d add that you should shop online and go with a no-load insurance company. Similar to no-load mutual funds, there is no sales agent, no commission, so premiums are less expensive.</p>
<p>Term insurance, perhaps just 10-year (if it’s inexpensive) sounds like it might be a prudent move. We’re not the sort of family with a lot of liquid assets, and I’m thinking educational loan repayment and “final expenses”, hard as that is to even contemplate. As somebody posted above, you don’t need financial problems compounded with the emotional devastation. I think I’ll check into it…</p>
<p>Keep in mind that any loans that are in the student’s own name are NOT the responsibility of parents in any event – so they would not have to be paid off. Of course it is a different thing for any loan that the parent has cosigned.</p>
<p>Also, before you go off and buy a $10K policy, check the insurance you already have, particularly health insurance. Many health insurance policies have an additional Accidental Death or Disability rider, usually for about $10K - so you may already have coverage that you hadn’t thought of.</p>
<p>Hmmm… hadn’t thought of that - I’ll call good ol’ BC/BS to see if we have anything.</p>
<p>Bluebayou said it most eloquently, and Calmom is also correct. If you are 18 and have debt in your name, it is no one elses responsibility to pay it off unless they are a co-signatory on a loan. One of our local financial gurus describes life insurance as essentially an income replacement. If you have no income, there is nothing to replace. I also found this on the Illinois state insurance website: </p>
<p>"The goal of life insurance is to provide a measure of financial security for your family or loved ones after you die. If you are a young college student with no dependents, life insurance is not as important as it will be when you get older and are married and/or have children. For most college students, the only reason to buy life insurance is to cover funeral expenses and debts, if there are any. Your parents may already have a life insurance policy on you that will cover these expenses. "</p>
<p>If you don’t have a lot of liquid assets, but are willing to set aside $25/mo for insurance, I’d recommend you put it instead in savings for the short term, in a decent interest-bearing savings account (feel free to PM me and I’ll tell you about a great savings program- and no, I am not an agent or in the business, but it is very good, and everyone in the family, including grandparents and kids are doing it). Then, when you feel you have enough to invest, put it in a no-load mutual fund or something. They are pretty low-risk. If you are comfortable, try the stock market. Learning to save and invest is a very important skill for college kids.</p>
<p>I used to be a big proponent of insurance, and we do have plenty at this point in our lives, but it is to protect assets. There is really little need for life insurance when you really don’t have any assets to protect. Term insurance is not an investment- it is a gamble. They (the insu. companies) are betting that you won’t die, and you are betting that you will. That’s why for HS/college aged kids, auto insurance premiums are high and life insurance premiums are low. If you have some medical condition that will affect your ability to buy life insurance later, then you might want to buy a term policy that won’t require a health exam. Other than that, there are much better ways to invest $ at a younger age.</p>
<p>Addendum: As for AD & D policies, even AAA offers that for next to nothing or possibly nothing, as part of their roadside coverage.</p>
<p>A lot of credit cards come with AD&D policies, too - the credit card companies probably give that away free for their own protection - so they can get the insurance company to pay up if their debtor drops dead.</p>
<p>Calmom-
Good point!! And maybe if they cut you up, they can get more $$ per finger, toe and limb :)</p>
<p>Here’s a description of AD&D insurance <a href=“http://www.insurance.com/Article.aspx/artid/216[/url]”>http://www.insurance.com/Article.aspx/artid/216</a></p>
<p>All good points. </p>
<p>We weren’t looking for an investment in LI. We are looking to cover expenses and costs. We discovered that a small policy wasn’t that much in cheaper than a larger policy. Likewise for the time frame. We got one of those solicitations in the mail too, and we asked the same questions that the OP makes. </p>
<p>Son will get the policy when he’s out of school and more $ knowledgeable, </p>
<p>We view LI, of course, as risk management. We also use Investments as a risk management tool to making wages. (Jobs are not all that secure.)</p>
<p>We used to carry child LI on our policy, however, later found that he could have his own policy at a lower cost. Hence that is why his policy seems to be relatively high. We shifted cost from us to him for approx the amount of $. </p>
<p>We are not in a position to save for his education since he is in college and we are liquidating the investments and contributing $ for his tuition. We did the savings and investments for him long time ago at a tremendous rate. $25/mn now only covers 2-3 days of his food expenses. </p>
<p>Debt load for his college is now at $60K as a junior. We will liquidate more of the assets next year to make total approx $70K. We are increasing the liquidation of his/our assets to maintain this debt load and because the investments are pretty much recovered from 3 years ago. He also wants to go to 2 years of grad school.</p>
<p>Like I said. All of this is risk management of assets. Any suggestions that we could explore furthur? It’s almost all I think about sometimes. It’ been a real juggling act since 9/11. I never told my wife of the near catastrophe of 9/11 to our/son’s college programs other than it was going to be close. </p>
<p>Thanks to get this off my mind.</p>
<p>The debt load that we carry for his schooling is because; The 3 years following 9/11, I couldn’t liquidate the assets to pay for school, liquidation wouldn’t be enough to cover the costs, and we be reasonably solvent. I made a risk management decision to take on debt (Staffords & PLUS) and, PRAYED, that the economy would recover. This “bet” has materialized to our favor. </p>
<p>HOWEVER:
The situation is still going to be a near thing. His college costs are increasing faster than our now very conservative positions. The USNWR college cost for tuition+R&B was $34K in the most recent publication prior to son’s entrance. That cost now, as a junior, is $42k/yr. I expect it to be $44K as a senior. </p>
<p>To bring this back to LI. We are not looking for LI for 40-50 years for the kid, that will be his decision. We are looking for the time period where we have to pay for the loans (now consolidated for 30 years) and really specifically just until he gets out into workforce and assume the payments. Everything we have done is a “bet” that the investments would increase at a good compounding rate, that any market downturns would be short, that the my industry in technology wouldn’t tank and not recover (high tech), etc. All I am trying to do is plan for the future and prepare for the worse. </p>
<p>Good Luck.</p>
<p>Istoomuch, are you saying that you have an agreement with your son that he will assume the payments at some time in the future? So that your plan is to take on $60K worth of debt now, assuming that you won’t actually have to pay off the entire amount because your son will take it on once set up in his career?</p>
<p>If this is the plan, then I can see the value of life insurance - in at least the amount of the total debt – because you are in fact insuring your son’s earnings - it is just that you are presently insuring the value of future earnings.</p>
<p>And excuse me if I’m out of line, but does your SON know that this is what has been borrowed? (I ask only because of your comment above about never telling your wife). The main reason I ask is that when I was practicing law, I frequently encountered situations where parents had lent money outright to one of their kids, or borrowed/cosigned on their behalf, with the expectation of getting paid back … and then there was some sort of falling out with the kid, and the kid was either unwilling or unable to pay the agreed amount. In every case there was absolutely nothing I could do to help these families, because there was nothing in writing to document the debt (or else there was some sort of promissory note that acknowledged the debt but didn’t specify any date for payment - which is equally useless). The problem of course is that the kid always had a very different recollection of the arrangement than the parents. </p>
<p>So what I am saying is that if you have taken on $60K worth of debt with the expectation that in a few years your son will take over the payments, you need more than life insurance for the next few years: you need (a) a written agreement with your son, clearly setting forth his obligations, and (b) life insurance on him for the full term of the debt, until it is paid off.</p>
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<p>however, not all student loans are treated this way. If the student has debt that will NOT be discharged through death it is reasonable to buy life insurance to cover the debt. Otherwise I wouldn’t recommend student life insurance.</p>
<p>NJRes - thanks for posting that - I didn’t realize that the PLUS loans are discharged in that way. </p>
<p>I would point out that if an unmarried student has no assets and no life insurance, then any loan directly to the student is discharged upon death no matter what the terms of the loan specify – the lender can’t collect if there is no money. The only way the lender can collect is to make a claim against the estate – hard to do if there is no estate.</p>
<p>Calmom: Never thought of LI for son as protecting his future earnings. Good point about a written agreement.</p>
<p>As responsible parents we of course have LI. How much longer we will maintain LI is something I am pondering. Anyway we had a child policy (rider) on our policy. We were getting solicitations just like PEOPLE got and it started me to thinking… If the kid got his own policy-what would be cost? Discovered that his cost wasn’t that much more And that he could have a lot of coverage. We own his policy because the agent said that he was underage and couldn’t own the policy, which worked for us anyway. What we did is to take his cost off our policy, hence his coverage dependence , added a few more bucks and he got hugh amount more insurance for definitely a longer period than I am willing to keep ours. The decision was strickly a value based decision, which I later morphed to my post #3, particularily when I see my progressive worsening health problems, and things we hear/see kids do at college. </p>
<p>Does S knows how much $ borrowed. Yes, he does. Makes him careful with the $$. Does S knows how that money is to be paid back-Sort of. He knows that the $ is in various investments and accounts, all of which is in joint accounts with his name. He has access to statements if he desires, which he doesn’t. I tried to talk to him in more detail this past SpringBreak but it was blown off. Now today I discovered from spouse that he wants to learn more about accounting-business. Am I the only one to discover that talking $ education is way more difficult than sex ed? Is money just like sex- IT JUST HAPPENS! ?</p>
<p>We have a close relationship. The money is HIS money that we started when he was a baby and grandparents gave to him, for his college. As you know, minors, cannot “own” accounts but must be in a custodianship-as we are told. I really don’t like to have any loans but the amount that CMU wants versus his college funds was far out of balance 3 years ago, and the college loan rates was very attactive then and now, but will get worse. We have most of the loans as PLUS because, I am not going to cosign anything and I want to keep his record clean. </p>
<p>My wife Does know about the retirement funds and college funds. She knows that the bubble loss was severe but doesn’t want to know the severity. We didn’t then or now have a great deal of aggressive money. The media says that people was/is in the same situation. </p>
<p>I plan to have a good portion of the loans paid off by the time he gets a master’s, The money was dedicated for college anyway and if he gets “independent,” all the loans will be paid as much as possible and leaving little funds remaining for him to claim. My projections is $0 bucks on BS graduation, however, I do not plan to pay off the loans when the investment increases is more than the loan rates. </p>
<p>NJres: Didn’t know about the LI for student loans, but again the LI was really a value purchase-transference, and only a few dollars per month more, for far more coverage, and longer period than he/we had coverage under our policy. </p>
<p>Have I missed anything? Not going to sleep tonight.</p>
<h1>4. [q]$7/mo and put it into a good equity fund[/q]</h1>
<p>??? </p>
<p>We did 30x that amount for 10 years, from age 0-10, and we got lucky. Why do you think I worry about the $, and “sometimes that’s all I think about.” We really threw everything we earned into it. If it wasn’t needed. it wasn’t got.</p>
<p>Istoomuch, I’m sorry you are feeling under so much pressure financially, but it sounds like there are plenty of assets in your son’s accounts to cover whatever debt you have taken on, and I think your son’s seeming lack of interest in discussing it is just an indication that he prefers to let you do the thinking and planning. I also found it hard to talk with my son about details of money --like yours, he just didn’t seem interested in the details. I really don’t think our kids can really make sense of it all until they are on their own and have some sense of the day-to-day expenses involved. Until then, it’s just figures on a piece of paper.</p>