Student loans: another smart reason for disability insurance
By Kelly Moser
Disability Insurance Services
When I went to college, I chose to study at a small, private Christian school, complete with smaller class sizes and a tiny campus with a big view. But with a private school education came a large tuition fee, causing me to take out student loans. A whopping $76,000 in student loan debt knocked at my door just six months after I took my last final. I had barely started my first job when I had to begin making $700 monthly payments.
Luckily, I now work for a company that offers both short- and long-term disability insurance, giving me (and my husband) piece-of-mind that if I ever become sick or injured, my disability benefit will help with more than just our rent and groceries — it will help pay my loans.
But despite my husband’s assistance, if I become disabled, it won’t be my husband’s name or credit on the line for my loans. The burden would fall beyond my credit, onto my cosigner, who dutifully signed his name to my mountain of debt — my dad.
At the age of 18, I wasn’t able to take out student loans without a cosigner. My dad, assuming I would work hard to pay off my debt as quickly as possible, signed his name next to mine, no questions asked. And lucky for him, if I become disabled, I have the income protection I need to continue making my payments.
But not every worker with student loans has disability insurance. According to Fidelity, the average debt of a graduating student in 2013 is $35,000. And because most college students need a cosigner for student loans, the average parent or guardian of a graduating student has most likely cosigned a student loan or two.
If that graduate were to become disabled without having disability insurance, the parent or guardian would be responsible for those loan payments. Seeing as how 1 in 4 of today’s 20-year-olds will suffer a disability at some point in their working careers, cosigners would be doing themselves a disservice by not advocating for their children to secure disability insurance protection. Even if a graduate is able to defer the loan payments, the cosigner’s borrowing potential and interest rates on other loans will continue to be affected until the debt is paid off.
And, according to disabilitydischarge.com, filing total and permanent disability, which can eliminate all of one’s debt, can’t happen until the disability has lasted for a continuous period of at least 60 months or can be expected to last for a continuous period of more than 60 months. That a potential five years' worth of payments that still have to be made.
Ask your clients if they’ve cosigned any of their children’s loans. Remind them that their child’s sickness or injury would not only affect their child’s finances, but their own credit, too. You might be surprised how many of your clients’ children will soon be making appointments to discuss DI and requesting disability insurance quotes — for their financial protection and their parents’.
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