Have a recent college grad?
Congratulations! This is such a huge milestone that comes along with a lot of exciting changes.
One major change that may not be at the front of your mind is life insurance. Between the ages of 21 to 25, your child may fall off of your life insurance policy. And depending on their life circumstances, they may want to take this time to open a policy of their own.
Child Rider Policies
Graduation in and of itself doesn’t have an influence on insurance policy policies. However, if you have your child covered on your life insurance policy through a child rider, that coverage will stop between ages 21 to 25, depending on your individual policy.
There are a couple other situations that could cause your child to lose coverage. While most college students don’t get married, in some populations this is the prime time for exchanging vows. People who attend LDS colleges, for example, are far more likely to get married or even have children in college than the rest of the US population. When your child gets married, many child riders will expire even if they haven’t yet reached the age of 21-25.
You’ll also want to keep an eye on your child rider if you had children at a more mature age. Some child riders expire when the parent hits age 65, regardless of how old or young the covered children are at the time of expiration.
Back in the day, there wasn’t too much of a reason for recent college grads to apply for life insurance unless they were already married or had children of their own. If your child is a parent themselves, they should absolutely apply for life insurance.
However, more and more young people are taking on monumental amounts of debt to finance their higher education. In today’s college tuition environment, your child may want to take out a life insurance policy right away -- whether they have kids of their own or not.
In most cases, if your child has federal student loans, they will be discharged upon their death. The water starts to get murky with Parent PLUS loans, though. Most of the time, if the parent or child passes away, the loan will be discharged. However, if both parents signed onto the Parent PLUS loan and the only one that passes away is the other parent, the surviving parent could still be on the hook.
Private student loans do not come with the same protections. If you cosigned on the loan, in almost all cases you will be responsible for the debt in the unthinkable event your child passes away.
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