<p>I'm weighing purchasing life insurance for my student, in an amount that exceeds any loans that I guarantee for his grad school. I recently heard a story about a student who died in a tragic accident, and whose parents had to pay the student loans they had co-signed. It seems sensible to get life insurance in the amount of the loans as long as I have exposure for those loans. My student can then decide whether or not to continue the policy later. </p>
<p>I was planning on purchasing $75K-$100K, but the insurance brokers are telling me that I can purchase $250K at my student's age for only $50 more a year, and that the policy would also be convertible to whole life without a health exam during the next 20 yrs. I guess it is reasonable to buy insurance when you're young and healthy anyway.</p>
<p>Has anyone else considered this? If so, how much did you end up buying for your student?</p>
<p>No, but it makes sense. Converting it to whole life is not going to make sense, though. Buy term to cover the loans; you can reduce it or drop it as the loans get repaid.</p>
<p>I think it makes sense. I think the only way conversion would make sense if the child became uninsurable due to his/her health and still wanted insurance.</p>
<p>I think it is smart and the convertibility protects his future insurability should his health or risk factors change (not uncommon for young adults)</p>
<p>$250k is a much better deal than anything less as the cost per/1000 goes down at $250k and the base policy fee, which does not change with the amount, makes us a large part of the premiums for a low cost policy. (I work in the industry)</p>
<p>A term plan should be pretty cheap for a university student, but do ask the agent for a copy of the underwriting guide for that company and give it to your son. Many parents have a surprise when the exam is done- for example kids may smoke socially, doubling the premiums- so have your son review the list and make sure there are no surprises.</p>
<p>We purchased 250K, term life, when DS turned 18. He's now almost 24, and just taken a FT job. We are the owner but he pays the premium. I am thinking about having him purchase another 250-500K to lock in pricing and while he is still in preferred status.</p>
<p>Makes perfect sense to me too. Premiums on younger persons are cheap enough. The "convertibility option" is probably window-dressing -- at least let's hope that it is. Good thinking NeonZeus.</p>
<p>The stock of my life insurance company has dropped by 75% in the last couple of months. They're one of the strong ones as far as I know. I do wonder about their ability to cover payouts in the future if their investments have been trashed.</p>
<p>I've heard horror stories about people with whole life policies before. I hope that they don't become common.</p>
<p>Somemom- You are correct (Stafford loans do have loan forgiveness for death) - private would not. For grad school >$30K+ per year, private will be necessary.</p>
<p>Yes, PLUS loans would be forgiven. But right now at 8.5% flat rate interest the PLUS loans are not really competitive with other lending sources -- and the discounts on those loans are no longer available.</p>
<p>I agree with all the prior comment - its a good idea. Also, life insurance is significantly cheaper particularly for people when they are younger - just don't mention all the bungee jumping and sky diving.</p>