This week I had a grandfather contact me about helping his grandson apply for a policy to cover his student loans. The grandson just finished pharmacy school and had a total of about $150,000 in student loans. Even though he was starting a stable full time job, he wanted to ensure that his loans would be paid if something happened to him. We put together a policy for him at a nominal cost of $100/year.
This situation is very typical. People are coming out of school with a tremendous amount of student loans. These loans must still be paid in the event of a disability.
Here are the clients listed by occupation that we see with the largest number of student loans that can take advantage of these policies (in no particular order)
- Attorneys/Law School Graduates
- Investment Bankers
- Medical Residents
- Computer Scientists
- Physician Assistants
- Nurse Practitioners
There are a handful of disability insurance companies that have addressed this issue and there are a few options for people.
- Depending on the loan, you may purchase a policy that covers the balance of the loan. These are offered through Guardian and Principal Financial Group. The policy will pay a monthly benefit in the amount of the loan payment for the remainder of the loan repayment period. For example, let’s say you have a $1500/month loan payment for the next 15 years. If you became disabled in the 3rd year, the policy would pay the remaining 12 years (assuming the disability lasts that long).
- Guardian now offers a student loan rider on an individual policy. When you purchase an individual policy to cover your personal income, this would be an additional benefit amount that would pay benefits to cover that loan payment.
These student loan policies also become important when professionals are in the process of purchasing a business or a medical/dental/veterinary practice. We often see dentists who are purchasing a practice that are required to purchase these policies by the lender before the loan will be issued.
For more information about student loan or loan repayment disability insurance policies, please contact Set for Life Insurance today!