From tuition to dorm fees, attending college can be pricey. Most students have to rely on student loans and financial aid to cover expenses. Unfortunately, these resources may still not be enough. One viable alternative is using life insurance funds to fill in the funding gap. If you’re considering this source to help with college costs, keep in mind the following tips.
4 Tips for Funding College With Life Insurance
1. Carefully Determine Coverage Amount
Ideally, you will want a policy that covers your child’s full student loan amount and interest. Most private student loans are available in terms of up to 15 years. Consider the loan’s term and repayment period when determining the desired amount of life insurance coverage.
2. Look Into Term Insurance
Term life insurance is typically available in incremental terms of 5, 10, 15, 20, and 30 years. The premiums are generally cheaper compared to whole life insurance. Depending on the policy, parents can use the coverage to pay off student loan debt.
3. Be Aware of Insurable Interest
Grandparents and other relatives can buy life insurance to help cover college expenses. They will need to prove insurable interest, which indicates the policyholder would face a financial hardship if the student dies. The college student will need to agree to the insurable interest condition and sign the life insurance policy.
4. Compare Rate Quotes
It’s also smart to compare rate quotes and ensure you’re getting the best deal. An experienced life insurance agent can help you shop around and compare rates and features. The policy amounts can be customized based on a person’s income and their desired monthly premiums.
An investment in higher education pays off later through better jobs and higher salaries. If you want to help cover your child’s college costs, the team of agents at Wilmoth Insurance Agency in Cookeville, TN, are here to help. Since 1939, the independent firm has helped families secure life insurance coverage through its network of leading carriers. To learn more about funding college with a customized policy, call (931) 526-6181 for a friendly consultation. Visit the website for extensive information on the agency’s insurance options.