Results 1 to 7 of 7

Thread: General loan repayment question

  1. #1
    Moderator Miss_McKenna's Avatar
    Joined
    Nov 2007
    Posts
    1,892
    Thanks
    82
    Thanked 825 Times in 437 Posts

    Default General loan repayment question

    This is just a general issue I was thinking about. I have private student loans and I know that if I die then they take all the money I have to cover it... how would that work if I had Life Insurance with another beneficiary? The reason I ask if that having just graduated, I'm not really looking for life insurance right now, but we get a 9-month free policy from our alumni association. I would put my sister down as my beneficiary, but I don't see much point if it's just going to go to the loan people anyway, should something happen to me.

    Of course ideally I would not have to deal with the 'dying' issue anyway lol!

    Thanks!


  2. #2
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: General loan repayment question

    If you are not required to purchase life insurance for a loan and you are of age (I'd guess 21) to make youir own financial desicions and have little assets you would plan to pass on, you need not purchase term (or 'whole') life insurance. The lending company knows your circumstance, presumably, and part of the loan interest is allocated to cover the risk they are taking on with you.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  3. #3
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: General loan repayment question

    I think the question is, are life insurance proceeds part of the estate or not? If they are part of the estate, then creditors would have access to that money. If not, then the money would go directly to your sister. I think a lot of it depends on what state you are in.

    Personally, I think life insurance is for your husband and child to continue on some time without your income or whomever you want to bury you so it is not their expense. If it is a burial, just keep $5,000 around. If you are unmarried, life insurance is an unnecessary expense.

  4. #4
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: General loan repayment question

    If life insurance has a beneficiary other than your estate, it is a non-probate asset. It goes directly to the person who is the beneficiary and is not available for the payment of last debts.

    HTH
    Z

  5. #5
    Featured Member Vamp's Avatar
    Joined
    Jul 2004
    Location
    Missouri
    Posts
    1,111
    Thanks
    271
    Thanked 757 Times in 289 Posts

    Default Re: General loan repayment question

    Quote Originally Posted by Miss_McKenna View Post
    This is just a general issue I was thinking about. I have private student loans and I know that if I die then they take all the money I have to cover it... how would that work if I had Life Insurance with another beneficiary? The reason I ask if that having just graduated, I'm not really looking for life insurance right now, but we get a 9-month free policy from our alumni association. I would put my sister down as my beneficiary, but I don't see much point if it's just going to go to the loan people anyway, should something happen to me.

    Of course ideally I would not have to deal with the 'dying' issue anyway lol!

    Thanks!
    If you came into my office I would ask you a few questions first ....

    One do you have any children? Are you married? Do you have any assets of value ie house? car? etc. If people don't they usually don't care if a loan gets paid off at their death lol

    As far as the life insurance is concerned .... If your sister is the beneficiary she would get the money. If she is deemed the executor of your estate either by a will or the state after your death ... then the lender could come to her for the money as well.

    Bottom line .... if she isnt on the loan she isnt liable ... The worst that could happen is they take the insurance money ... she isn't out anything either way.
    Nature knows no indecencies; man invents them. ~ Mark Twain


  6. #6
    Moderator Miss_McKenna's Avatar
    Joined
    Nov 2007
    Posts
    1,892
    Thanks
    82
    Thanked 825 Times in 437 Posts

    Default Re: General loan repayment question

    Thanks guys!!

    My student loans are only in mine and my co-signers name (non family) and the life insurance thing is a free one-year $10,000 policy sign-up from the Alumni Association at my university. I wasn't going to bother with it seeing as I don't have kids etc, but then I figured that (god forbid) something did happen to me, it would be nice if my sis got the $10K. On the other hand, if the student loan company was going to snap it up, I wouldn't bother. But after it stops being free, I won't sign up for the regular one seeing as I don't really have anyone to potentially leave behind.


  7. #7
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: General loan repayment question

    Life insurance proceeds are exempt from taxes if they are paid to a beneficiary, not the estate. This is one of the selling points for life insurance for those who have responsibilities for others. We've had to purchase term insurance for several of our contracts, though I know not why. They weren't that big in the total scheme of things. I've never heard of personal loans requiring that, thought heavy mortgages conceivably could.

    It would be very ironic if a health insurance policy required that too.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

Similar Threads

  1. Care Credit Loan Question
    By kaiarose in forum Body Business
    Replies: 3
    Last Post: 01-22-2011, 09:14 PM
  2. Car Loan Question...
    By Rockell in forum Dollar Den
    Replies: 3
    Last Post: 09-28-2008, 08:31 PM
  3. Replies: 5
    Last Post: 05-01-2008, 08:23 PM
  4. What Should I Ask For Repayment? *Kind Of Icky*
    By sc0101 in forum The Lounge
    Replies: 17
    Last Post: 06-04-2007, 12:24 AM
  5. Question on 401 k loan
    By CuriousJ in forum Dollar Den
    Replies: 2
    Last Post: 03-21-2005, 04:41 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •