Whether you’re working a bit or hitting the books full-time, you might feel some financial stress as a graduate student. You have confidence the work you’re putting in now will pay off — quite literally — when you get your degree, but money can be tight.
That’s why life insurance for grad students is usually a low priority. You might not absolutely need to get life insurance as a student, but there are some instances where it makes a lot of sense to consider. And we have good news: graduate student life insurance can be affordable.
Consider whether you have loved ones you need to protect financially in the event of your untimely death. It may be a morbid thought, but there are some cases when it may be an excellent call to invest in a life insurance policy while you’re in school.
Reasons a grad student may want life insurance
Grad student life insurance isn’t typically a must, but there are four specific reasons why you might want to consider getting life insurance while you’re in school.
If someone else co-signed on your loans, graduate student life insurance could make sure you don’t leave them with a significant financial burden. If you pass away, your co-signer becomes solely responsible for any remaining loan debt, which could be a hefty amount. To protect the person or people willing to put their name on the dotted line to fund your education, you might want to consider life insurance to ensure they don’t get stuck with the bill.
Even if you signed on your loans by yourself, you might still want coverage. Federal loans get discharged when you die, but private loans might pull from your estate (basically, what you leave behind) to make good on what you owe them.
If your estate doesn’t amount to much, the lender will probably cancel the debt, and you can probably skip the policy. But if you’re hoping to leave something behind for your loved ones, you might want to shop around for life insurance for grad students.
No work benefits
If you worked before you went back to school, you might have enjoyed group life insurance coverage through your employer. If you’re going to school full-time now, you’ve likely lost that coverage.
If that is the case, you might want to look into grad student life insurance. An affordable term life insurance policy might help you bridge the gap.
Grad students with partners or children may also want to consider life insurance. If you’re a full-time student right now, you might not think that you’re contributing much financially. But if your partner relies on your grant money to help pay part of the rent or mortgage, or they would need to pay for child care without you, the financial security provided by life insurance could be a big help.
If you are a parent, it might also make sense to leave something to your children if you will no longer be around to provide for them financially in the future.
Less expensive options
If you are a younger grad student, you might want to consider getting a policy even if your budget is tight right now because this is likely the cheapest you’ll ever be able to buy life insurance. The cost of a life insurance policy climbs steadily as you get older.
If you buy when you’re younger — and probably at your healthiest, too — you can lock in low rates on a policy that you can keep to protect your loved ones for decades to come.
What kind of life insurance grad students buy
There is no specific “life insurance for student” category, so it will require a little bit of research to find the best life insurance policy to fit your unique needs.
There are two main buckets into which all life insurance policies fall, including life insurance for grad students:
- Term life insurance. These are policies that expire after a set time, i.e., after the term is over. Because they don’t last for your entire lifetime, they’re the most affordable type of life insurance. Beyond working on a budget, they can also be a good fit when looking for student life insurance because you can set your term. If you have student loans that will take 20 years to pay off, for example, you can get a policy with a 20-year term to ensure that the financial burden doesn’t fall on any of your loved ones.
- Whole life insurance. Whole policies are more expensive, but they last your lifetime. That means you don’t end up paying premiums for a policy that expires before it pays out, which is a definite perk. Beyond that, whole policies also offer a cash value component that can provide funds for anything, from finance a low-interest personal loan to paying your policy premiums down the road. If you have some extra cash for the higher premiums and are looking for long-term investments, this may be a good option for you.
How much life insurance to get
It’s important to decide how much of a policy you want to buy — at least to an extent. Many insurance policies will include a cap on your death benefit at a certain amount.
Usually, that ceiling is based on your income, but if you’re not earning an income, the carrier will project your earnings. Insurance companies approach this differently, so it’s a good idea to shop around to see your coverage options.
Just because you’re offered a certain amount of death benefit doesn’t mean you should necessarily take it, though. The higher your death benefit, the more your premiums will cost. It’s all about balancing future needs with your current budget. To help arrive at the correct number, make sure you consider:
- Your dependents and their needs. Does your partner need your help to make the mortgage/rent or buy groceries? Would they be hard-pressed to send your kids to college if you weren’t there to help? Make sure your death benefit will be enough to cover your portion of day-to-day expenses. Then think through financial goals you might want to help your loved ones accomplish, like paying off the mortgage or funding a college education for your kids.
- Your student loans. This one’s pretty simple. Make sure your death benefit covers your student loan debt in its entirety.
- Other debts. The same rule here: make sure your policy can cover any other debts you might have, including car loans and credit card debt.
- Your funeral expenses. You don’t want your loved ones to feel torn between saying goodbye the way they want and busting their budget. And since funerals usually cost thousands of dollars, you’ll want to make sure your death benefit can cover these expenses.
You might want to consider using a life insurance calculator to determine the right amount of life insurance. It’s not specifically tailored to life insurance for grad students, but it can help you think through the right policy amount. It’s always a good idea to speak with a licensed insurance agent about your specific needs to ensure you are getting the right coverage at the right price.
What’s the best life insurance company for grad students?
No insurance company offers grad student life insurance specifically, and there won’t be one best company that is right for everyone. It’s a good idea to shop around and compare quotes to make sure you’re getting the right policy for your needs and budget. If in doubt, speak with a licensed insurance agent or financial planner to determine what’s best for you.
Should I cancel my life insurance when I graduate?
It’s typically not a good idea to cancel your life insurance. The coverage may be even more important once you start earning an income. At that point, your loved ones will probably rely on that income for their quality of life. Maintaining your life insurance ensures that they’re protected if something happens to you.
How do I get the cheapest grad student life insurance?
If budget is the primary concern, it could help shop for term policies rather than whole ones. Also, consider taking steps to be as healthy as possible (e.g., quit smoking or lose weight) since insurance providers charge less to insure people they think will live for quite a while.