Your student loans are wiped if you die, so the debt does not become part of your estate. However, many students accumulate quite a bit of other debt while they’re at university, including credit card debt and overdrafts. Life insurance could help your family pay these debts off in the event of your death. Fortunately, since most students are young and healthy, life insurance is usually inexpensive for them.
Students who already have partners or dependents should buy life insurance to protect them from unnecessary financial hardship in the event of their death. Life insurance cover for students should pay out a fixed, one-time sum in the event of death. It should be enough to cover debt that isn’t discharged upon death, including mortgage debt if applicable.
If you’re a student, it may also be useful to choose life insurance that will pay off in the event of diagnosis of terminal illness. Some policies will also provide income protection in the event you are injured or unemployed. You may be able to get a policy with a family income benefit, which makes regular payments to your dependents in the event of your death.
While not every student is a candidate for life insurance, students do have other pressing insurance needs because students are higher risk targets than the general adult population. One in three students becomes a crime victim each year, and student housing is a prime target for burglary. Student housing is unoccupied for long periods, and is often home to small, expensive gadgets. Most students could not afford to replace the belongings in his or her dormitory or apartment if they were stolen.
Student possessions insurance covers personal possessions if they are damaged by fire or water, or if they are stolen. Some will cover accidental damage as well. To figure out how much possessions cover you need, you’ll have to do an inventory of your belongings. Since some insurers limit payout on individual items, you may have to insure some expensive goods, such as laptop computers, separately. Occasionally student possessions insurance can be added to a parent’s homeowner policy, and some university residence halls include insurance in their accommodation fees. However, it is best not to assume that residence hall fees include insurance, and to ask to make sure.
While students with dependents should compare life insurance and make sure that their family is financially protected in the even their death, all students should make sure that their possessions are adequately covered. Education is expensive enough without having to replace lots of expensive items.
