by John Darer CLU ChFC MSSC RSP CLTC
Professionals in medicine, law, pharmacology, dentistry, veterinary science, and business often graduate with large student loan debt between $100,000 and $210,000. and face significant exposure, particularly early in their career.
Why is a disability early in a career problematic?
- Unpaid student loans are at their highest and income just beginning to grow.
- The conditions under which student loan debt can be discharged are very stringent.
- While Federal student loans are forgiven in the event of death. However, when it comes to disability, they require the borrower to be totally and permanently disabled with a condition expected to last at least 5 years and result in death in order to meet the federal standards for loan discharge.
- Unlike many other kinds of debt, federal student loan debt cannot be discharged in the event of bankruptcy.
Disability insurance is available for professionals that expressly addresses student loan exposure
•The Student Loan Protection Rider enables insureds to protect their ability to meet student loan obligations in the event of Total Disability. Coverage can be tailored to their specific debt
Key features of Student Loan Protection Rider*
- $500-$2,000 per month towards student loan payments for those pursuing an advanced degree (master’s or higher).
- $500-$1,000 for all others.
- Obtain additional coverage up to $2,000 per month, depending on degree above what they might otherwise qualify for based on income.
- Choose a 10 or 15-year term.
•At the time of writing, there is currently only one disability income carrier to offer a student loan disability protection rider.
Is any loan documentation required as part of the application process for the student loan disability protection rider?
No loan documentation is required at the time the policy/rider is purchased. The professional applying for the policy simply selects the desired coverage up the limits set forth above. In the future, if there is a claim made on the policy, THEN loan documentation is required to process reimbursement.