Should our kid have life insurance?

Should our daughter in college have a term life policy, with us as beneficiaries? — Name withheld, Superior, Colo.

Insurance makes sense only if her death would create financial woes — say, if you had to pay debts incurred for her schooling.

The sort-of-good news: Federal Stafford loans, the chief type of college debt, are forgiven when a student dies, explains Mark Kantrowitz, publisher of, a website about planning and paying for college. So are Parent PLUS loans.

Only one in six private student lenders, though, automatically forgives a loan, he says; look for a lender’s forgiveness policy in its loan contract. As with PLUS loans, a forgiven balance is taxed as income.

If you borrowed against your home to pay for school, expecting your daughter to pay you back, you’d also be on the hook, of course.

Should you take out insurance, your daughter’s age should make it cheap. Expect to pay about $100 annually for a 10-year $50,000 policy from a top-rated company.

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