Should I Buy Life Insurance To Pay Off Student Loans At My Death?

Student loan debt has topped $1 trillion, and is rapidly climbing. According to FinAid, total student loan debt is growing by $2,853.88 per second… That’s over $10 million per hour! Unfortunately, unscrupulous crooks are using the debt as a way to scare people into making bad financial decisions… Take the following story for example…

A friend recently came to me and was furious… She is in her late 20’s, middle income, with no spouse, significant other, or children. A life insurance salesmen approached her about buying a Whole Life Insurance policy. My friend knew enough to know that she doesn’t need life insurance right now, and politely turned down the salesmen. The salesmen was undeterred, and contacted my friends parents. He asked the father, “Did you know that if your daughter dies, you will have to pay off her student loans?” Terrified, the father quickly purchased a whole life insurance policy on his daughter to cover the amount of her substantial federally issued student loan debt.

So what’s wrong with this story? At death, your federally issued student loans disappear! That’s right… the government isn’t coming after your spouse, much less your parents, to pay off your student loans. So should you, or anyone else, have life insurance to pay off your federally issued student loans? No! Read more..

6 Questions About Umbrella Insurance

Have you ever heard of umbrella insurance? Maybe your agent tried to sell it to you when you bought your home and auto policies. Umbrella insurance, also called Personal Liability Insurance, provides protection in the event you are sued. We live in an incredibly litigious society, and it seems you can get sued for pretty much anything. Although some lawsuits are justified, many are frivolous. Either way, you need to protect yourself from the financial devastation a lawsuit can cause.

What does umbrella insurance cover?
If you are sued by someone and the judge/jury finds you guilty, your umbrella insurance policy will pay the claim up to the amount of coverage you have purchased. I like to call this “trip and fall” insurance, because if someone trips and falls on your lawn and sues you because of it, you are protected. Read more..

3 Things To Know BEFORE Buying An Annuity

Have you ever wondered if you should purchase an annuity? Has a financial salesmen ever tried to sell you one? Annuities are a form of insurance that protects the owner (you) from outliving their money. In their simplest form, you give an insurance company a lump sum of money and the insurance company sends you a monthly check for the rest of your life. Note I said simplest, because annuities come in MANY shapes and sizes. Annuities are products that, when used responsibly, can possibly help you achieve your financial goals… the devil however is in the details. Here are some things to consider before purchasing an annuity:

Who’s “recommending” the annuity?
It is important to understand the bias of the person recommending that you purchase (or not purchase) an annuity. People that sell annuities are paid on commission, and therefore only get paid when you purchase something from them. Just like anyone that gets paid on commission, this puts the salesman in the position of being biased towards you buying the product.

Annuity salesman are not required to sell you the best product for you; they can instead attempt to sell you the best product for them. For instance, if they could sell you an annuity with a 4% guaranteed rate of return and they get a 5% commission, or an annuity with a 3% rate of return and they get a 10% commission, they can sell the 3% product and don’t even have to tell you about the 4% one. Why? Because legally they are held to a “Suitability Standard” which means the product they sell must be suitable for your situation, not necessarily the best one for you. Read more..