Editor: Crass Cash
All of us want our little offspring to grow up and be successful. But don't jeopardize your financial well-being because of a mistake that you made with theirs.
Many student loans require the parents to sign as guarantors in case something happens to little Johnny. As a result you need to have life insurance for little Johnny in case something happens to him. Why? Because if you sign as guarantor and little Johnny dies than you're stuck with his student loans. That's right, unlike most debt since it's usually tied to an asset that can be seized in the effect of default, student loans cannot. You can't give back the education, like you can the keys to a car or house.
The best type of policy would be to get a "decreasing term life insurance" plan. Most people get this type of insurance for outstanding balances on mortgages. These are good because the loan will eventually and slowly get paid off as they pay down the principle, like on a mortgage. BE SURE TO CHECK TO MAKE SURE THIS IS HAPPENING!
Decreasing is better than level term because the premiums will be lower over the life of the insurance plan. Most student loans go for 20 years, so check with the loan and get it so that it ends at that same time. You can always cancel if it's paid off early, so hopefully that'll happen.
If little Johnny gets a good job than he needs to pay for this himself, instead of you. This will also incentivize him to get it paid off even faster. AGAIN, VERIFY THAT THE PREMIUM IS BEING PAID!
Many student loans require the parents to sign as guarantors in case something happens to little Johnny. As a result you need to have life insurance for little Johnny in case something happens to him. Why? Because if you sign as guarantor and little Johnny dies than you're stuck with his student loans. That's right, unlike most debt since it's usually tied to an asset that can be seized in the effect of default, student loans cannot. You can't give back the education, like you can the keys to a car or house.
The best type of policy would be to get a "decreasing term life insurance" plan. Most people get this type of insurance for outstanding balances on mortgages. These are good because the loan will eventually and slowly get paid off as they pay down the principle, like on a mortgage. BE SURE TO CHECK TO MAKE SURE THIS IS HAPPENING!
Decreasing is better than level term because the premiums will be lower over the life of the insurance plan. Most student loans go for 20 years, so check with the loan and get it so that it ends at that same time. You can always cancel if it's paid off early, so hopefully that'll happen.
If little Johnny gets a good job than he needs to pay for this himself, instead of you. This will also incentivize him to get it paid off even faster. AGAIN, VERIFY THAT THE PREMIUM IS BEING PAID!
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