If you’re a graduate student who balances a part-time job, you might already have a life insurance policy to replace your income if you die unexpectedly. But even full-time grad students who don’t earn a salary yet can benefit from purchasing life insurance.
Pursuing a graduate degree often comes with expensive student loans. The cosigner on those loans would be stuck with your debt if you die unexpectedly. Other graduate students have spouses and children who depend on them for their current or future earnings.
Life insurance terms you should know
Beneficiaries: The people you name on your life insurance policy to receive the lump sum of money — also known as the death benefit — when you die.
Cash value: The portion of a permanent life insurance policy’s monetary value that grows tax-deferred over the life of the policy.
Death benefit: The amount of money the life insurance company will pay your beneficiaries when you die.
Face amount: The dollar amount, or death benefit, your beneficiaries receive if you die while your life insurance policy is active.
Insured: The person who is covered by the insurance policy.
Policy: The legal document that includes the terms and conditions of your life insurance contract.
Policyholder: The person who owns an insurance policy. Usually, this is the same person as the insured.
Permanent life insurance: A type of life insurance that lasts for the rest of your life and usually includes a cash value account.
Premium: The amount you pay your insurance company to keep your coverage active. Premiums are typically paid monthly or annually.
Riders: Add-ons to a life insurance policy that provide more robust coverage, sometimes for an extra cost.
Term life insurance: A life insurance policy that lasts for a set number of years before it expires. If you die before the term is up, your beneficiaries receive a death benefit.
Underwriting: The process where an insurance company evaluates the risk of insuring you and determines your final rate.
Why graduate students should get life insurance
Even if you aren’t earning an income, the financial implications of your death can negatively affect the people in your life. If you have dependents or outstanding debts, you need a life insurance policy in place to safeguard your loved ones against financial hardship.
Outstanding debts — whether they be a student loan, business loan, or a mortgage — can unwittingly become a financial burden for the people you leave behind if you die. Graduate students, in particular, might have student loans to consider.
However, not all loans are created equal and whether you have a cosigner or not dictates what could happen to your debts.
Someone cosigned your loans
If you took out a private student loan to cover the cost of your education and have a cosigner on the loan, a life insurance policy could be vital financial protection for your cosigner.
When someone cosigns your loans, they’ve agreed to take responsibility for repaying it — as well as to take the hit to their credit — if you’re unable to pay them off yourself. Unlike federal student loans, which usually don’t ask for a cosigner, private student loans are not discharged after your death and the responsibility of the loan would fall on the cosigner to pay off.
Additionally, there might be other loans you’ve brought a cosigner onto that necessitate a life insurance policy, such as a mortgage. Like with private student loans, your mortgage cosigner would end up being responsible for paying down the loan.
You’re the sole borrower on a loan
Even if you’re solely responsible for a loan, your debts can be consequential for your loved ones.
If you took out a car loan or a mortgage and there’s an outstanding balance at the time of your death, the car or house then becomes the financial responsibility of family members left behind. If they’re unable to make the payments or sell the car or home in question, it can be repossessed — potentially risking the housing, transportation, and financial stability of your dependents.
Such outstanding debts are usually sorted out in a probate court, which may decide to sell off your belongings to recoup the loss if they cannot be paid off by your estate or loved ones.
Student loans can be a little trickier. If you took out a private student loan with no cosigner, then the lender would likely collect the debt from your estate to the detriment of anyone relying on it. However, if your estate has no funds, the debt would probably be canceled and no one would be liable for it.
If you die before paying off your federal student loans, the loans are discharged and you won’t have to worry about anyone left behind incurring the costs.
You’re married or have dependents
Even if you’re not making an income, you may still be providing economic support to your spouse or dependents — especially if you’ve taken out loans to cover the cost of your rent, bills, or any other everyday expense.
If you die and can no longer help your partner pay the bills, they’re going to incur that additional cost. Alternatively, if you performed any unpaid labor that would have to be replaced — such as child care, work around the house, or care for elderly parents — your partner would likely need to hire someone or take over the responsibility themselves and possibly take an income hit.
A life insurance policy can ensure that your loved ones aren’t struggling to pay some of the following expenses:
Rent or mortgage
Monthly bills
Everyday expenses
Child care or dependent care
End of life expenses
Learn more about what is covered by life insurance
You have or plan to have children
If you have children or plan to have children, you’ll want to have adequate protection in place in the event you die prematurely. Raising a child can cost $233,610 over the course of 18 years, or $12,980 annually — and even more if you plan to cover the cost of college.
If you intend to have kids in the future, you may want to plan ahead and get life insurance early on to lock in affordable rates. It’s recommended that you plan ahead for life insurance coverage by five years.
Learn more about who needs life insurance and why
The cost of life insurance increases as you age
Life insurance is cheaper when you’re young and in good health. Because the cost of buying life insurance increases as you age, you might want to lock in low rates now if you plan on getting a policy down the road anyway.
The table below demonstrates how the cost of life insurance premiums increases as you get older.
Average life insurance rates by age
Age | Gender | $250,000 coverage amount | $500,000 coverage amount | $1 million coverage amount |
|---|---|---|---|---|
20 | Female | $15.01 | $22.65 | $33.63 |
Male | $19.18 | $30.20 | $47.51 | |
30 | Female | $15.17 | $22.98 | $36.90 |
Male | $18.19 | $29.32 | $48.89 | |
40 | Female | $21.66 | $35.27 | $60.65 |
Male | $25.39 | $42.94 | $75.24 | |
50 | Female | $43.92 | $78.29 | $139.50 |
Male | $56.69 | $102.50 | $188.29 | |
60 | Female | $107.83 | $194.16 | $354.51 |
Male | $149.38 | $268.04 | $499.98 |
Methodology: Average monthly rates are calculated for male and female non-smokers in a Preferred health classification obtaining a 20-year $250,000, $500,000, or $1,000,000 term life insurance policy. Life insurance averages are based on a composite of policies offered by Policygenius from Brighthouse Financial, Corebridge Financial, Foresters Financial, Legal & General America, Lincoln Financial, Mutual of Omaha, Pacific Life, Protective, Prudential, Symetra, and Transamerica, and the Policygenius Life Insurance Price Index, which uses real-time data from leading life insurance companies to determine pricing trends. Rates may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 08/01/2024.
How much coverage should graduate students get?
Your life insurance policy should cover the length and amount of your debts and future costs. If you anticipate that your student loans will take 20 years to pay off, you’ll want a 20-year term length in place. Likewise, if you have $100,000 in student loan debt, you want a policy that will fully cover that amount so that no one is left footing the bill.
Learn more about how much life insurance coverage you should get
How much coverage can graduate students get?
Life insurance is technically an income replacement, and insurers want to see that you actually need life insurance before making a policy offer. This is why insurers review your evidence of insurability when you apply for a life insurance policy.
Your evidence of insurability is the financial justification for your life insurance coverage. It’s based on age and if your income is proportionate to the amount of coverage you’re asking for. If you don’t earn any income, then life insurance underwriters have to use their discretion when determining how much coverage they can offer you.
Maximum coverage available for graduate students by company
Some insurance companies will offer graduate, law, and medical students coverage based on their projected degree. Below are the coverage limits for some of the top life insurance companies:
Coverage based on your projected income
Without an income, the type of coverage you receive may vary across each life insurance company (as shown above) and individual circumstance, but there are a few different ways that your policy options can increase.
A medical student who has a projected income of $100,000 would probably need a $1 million policy — 10 times their income — but might only be offered $250,000 in coverage from some companies while they’re still in school.
But life insurance companies can be understanding when it comes to future income and are willing to make exceptions for specific circumstances. It’s entirely possible you could get an offer based on your future projected income before you’re employed — especially because insurers are more lenient with younger applicants than they are with older ones. Each underwriting decision is done on a case-by-case basis.
Insurers might ask for information about your expected employment date, expected starting job, and expected starting salary to determine how much coverage they will offer you.
Learn more about life insurance underwriting
Coverage based on your parents’ policy
Life insurance companies might use your parent’s policy to determine your coverage. Though there would still likely be a lower than usual cap on the amount of coverage you could get, financial justifications regarding a parent’s household income, net worth, and their own life insurance policy could provide the financial justification a life insurance company needs to grant you coverage.
Coverage for non-working spouses
Finally, if you’re in graduate school and you’re married, non-working spouses are able to get some life insurance coverage in proportion to that of their partner’s policy. Again, the type of coverage you receive varies depending on individual circumstances.
As a graduate student, you can plan for the future by purchasing a life insurance policy to carry you through graduation, safeguard against pricey student loans, and provide financial protection for your current and future family.
Not sure which type of life insurance is best for your future career? A licensed Policygenius agent can help you find the best policy for you.
