life insurance and student loans

[Anonymous]

We're reviewing our life insurance policies to make sure we are adequately insured. If my spouse dies, will I have to pay off his student loans? They're Stafford loans now consolidated with another lender. I was never clear when we got the insurance policies, but they were generous enough that I wasn't worried about it. With a second child on the way, the calculation needs to be more precise. Thanks!

[Anonymous]

My understanding is that as long as you didn't consolidate his loans with any of yours (if you had any), then you would not be responsible for his student loan debt if he died. However, I think the best thing to do would be for your spouse to call his loan company to confirm and make a written note in your files to that effect.

[Anonymous]

I'm pretty sure all federal student loans are discharged at death and that they are not a lien on the estate.

[Anonymous]

Federal student loan debt dies with the borrower. Private student loan debt must be paid by the borrower's estate (assuming there is no co-borrower; if there is, the co-borrower is on the hook). There are almost no circumstances under which your life insurance should be paid out to your estate, so if the estate doesn't have enough money to pay off debts, too bad for the creditors. In other words, ensure that your husband's life insurance is payable to *you*. If it is, that's your money and you don't have to use it to pay off his (solely owed) debts.

Hope this helps.

[Anonymous]

Federal Stafford loans are forgiven at death, but if they are now with a private lender I'm not sure that is true. If they are not forgiven then I think you need to consider whether the lender may try to collect out of his estate (any assets he owns at death). Also, if there were co-signers on the loan (such as you or his parents) then private lenders will often go after the co-signers to pay after death.

http://online.wsj.com/article/SB10001424052748704741904575409510529783860.html

[Anonymous]

who do you all use for life insurance? how was the process of getting it? Require a physical? If so can you just go to your own doc?

Thanks!

[Anonymous]

OP here. Thanks everyone. Very helpful. DH had actually consolidated his loans before we met, and he has no co-signers, thankfully.

15:19: We have two policies on DH, one through work and one outside of work in case he changes jobs. (He's a fed, though, so likely won't leave that system.) Can't remember the companies off the top of my head, but he did have to get a physical, at least for the one outside of work. He did just go to his own doc, who filled out the paperwork. He's in great shape now with a healthy lifestyle but does have a history of cancer.