Student Loan Debt and Disability

Several years ago a billionaire surprised 400 recent graduates of Morehouse College with a wonderful gift, no student debt. Robert Smith spent $40 million dollars of his vast fortune generously paying off each graduates student loans.

For the vast majority of college graduates there will be no billionaire to the rescue. 68% of all college graduates have student loans. Medical graduates face $200,000 in debt before their first day of work! With 45 million Americans straddled with student loan debt totaling nearly $1.6 trillion, a financial game plan is in order.

What if an individual suffers a total disability, how will the loan payments continue to be paid? The answer is pretty straight-forward… before a disability occurs, purchase a disability income insurance policy with a student loan rider. The rider pays the loan each month up to a pre-determined amount. After a waiting period, coverage begins once a total disability occurs due to an illness or injury.

Physicians and dentists can cover up to $2500 a month in student loan payments, and all others outside of the medical field up to $1500. The student loan rider benefit is in addition to the monthly disability benefit. The rider is typically in force for a period of 10 or 15 years.

Like most disability income insurance policies, the rider may be structured to fit a specific need, avoiding the one size fits all scenario. Such scenarios can lead to being under-insured or over-insured.