July 28, 2010

Student Loans and Life Insurance

By Charles Moffat - July 2010.

HEALTH - When I went off to university in 1999 one of the things my parents decided to do (likely due to worry when they saw the size of my students loans) was sign me up for life insurance and the insurance agency sent a nurse to my university to check my physical condition.

After suffering the indignity of peeing in a cup and getting pricked with a needle to get a blood sample I was later informed I was in "excellent condition", "not a damn thing wrong with you" and the nurse apparently thought I was the most physically healthy specimen she's ever examined (not sure if that is true, but its what I was later told). 11 years later I should point out that this hasn't always been true. Poor diet and exercise both during and after university caused my weight to fluctuate upwards and in 2005 a colleague of mine commented "When is the baby due?" while pointing at my increasing gut and joking about my habit of scarfing down multiple pastries during my lunch break.

Five years later and 30+ lbs of fat loss since then I would like to say I am in the best shape of my life, but I am not certain its true. I am definitely not as agile and flexible as I was 11 years ago. My goal these days is to put on muscle weight, just enough to make me look like male supermodel Marcus Schenkenberg. I am part way there, but nevertheless I am skeptical I would go through a medical with as much flying colours as I did 11 years ago.

These days more credit card companies, banks and other institutions are pushing the idea of life insurance for borrowers... their primary concern is if you die then who is going to pay off the loan?

Which brings us to the topic of "no medical exam" life insurance companies. Finding a good one can be difficult, especially since a few of them out there refuse to pay out. This then creates problems for the banks/loan companies because if the life insurance company refuses to pay up with a borrower dies, then its the bank which ends up losing all that money... or depending on the state of your finances, your family may be held accountable.

Suffice to say banks therefore have a vested interest in finding reputable life insurance companies that actually pay what is owed when a borrower dies.

Lets say for example you get a loan. Depending where you get it from the might ask if you have life insurance coverage. If its only a short term loan you could get an online payday loan, if you're willing to pay the extra interest charges, but otherwise I would not recommend that for any long term loans.

Next, assuming then that you require life insurance... what happens if you know you're diabetic, overweight, possibly obese and you're pretty damn sure you'd fail the medical exam so badly you'd have a huge premium added to your life insurance bill. Thus the need to find a no medical exam life insurance company... preferably one which is recommended by your bank because at least then you know they're reputable.

FedPrimeRate.com tracks interest rates, the prime rate and personal finance data with respect to loans and borrowing trends. The growing trend towards no medical exam life insurance companies has resulted in them building a section just for tracking reputable companies. They're probably not the only site doing this either, because for the banking industry these are important things to know.

"Our new life insurance page is... [] ...not just a bunch of dry content about life insurance. We've included highly instructive, real-world stories related to life insurance, stories that anyone can relate to. There's also a rich and carefully crafted life insurance frequently asked questions section which will be expanded indefinitely," says Steve Brown from FedPrimeRate.com, whose site also tracks car insurance, credit card trends, mortgage/foreclosure info and new loan products.

Even if you're not morbidly obese some people just don't like the idea of pushy medical exams, needles to draw blood and giving away urine samples. Some people faint at the sight of blood or even just the sight of needles.

If you do go shopping for life insurance the biggest recommendation I can made is to shop around, snoop around to see which companies have a lot of complaints or lawsuits against them, see who your friends, colleagues or banker recommends... and then try to pick the best one. The premium might be higher than some of the other ones being offered, but the ones with a low premium are more likely to never actually pay out because they're cheapskates and never deserved the money you paid them for life insurance.

Note: To me life insurance is really more for your family members than yourself. As long as I don't have kids, what do I care what happens to my loans after I die? I'm dead already. Leave me be. If you have a spouse and kids to worry about then its a whole other matter.

"... in this world nothing can be said to be certain, except death and taxes." - Benjamin Franklin.

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