Are you a college student who’s curious about life insurance? Life insurance is one of the best investments if you start early.
But which company provides the best life insurance for college students? Don’t worry — we’ll show you the top insurance companies for college students and how to acquire the best rates.
Continue reading our guide to learn more about the best life insurance companies for college students.
What are the top five life insurance companies for college students?
The top five life insurance companies for students are MetLife, Equitable Holdings, Prudential, New York Life, and MassMutual.
These five companies possess the highest market share in the United States, and they provide affordable college life insurance. But how affordable is college student life insurance?
Let’s examine the average term life insurance rates for college students.
|Life Insurance Companies||Average Monthly Rates|
|Mutual of Omaha||$12|
|New York Life||$11|
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We include more life insurance companies to provide more options that you can explore when you shop for life insurance.
MetLife is one of the most affordable companies for life insurance, but Prudential is one of the most expensive on the list. Each rate represents a 10-year term with $100,000 in death benefits.
Term life insurance rates are the most affordable for college students, as students are generally more healthy and have a higher life expectancy. Therefore, life insurance companies issue more affordable insurance rates.
Which life insurance company is better with customers?
To determine how life insurance companies perform with customers, let’s review the results from J.D. Power’s 2021 U.S. Individual Life Insurance Study.
|Rank||Life Insurance Companies||J.D. Power Scores|
|5||Mutual of Omaha||795|
|9||New York Life||777|
|No Rank||Industry Average*||776|
|12||Lincoln Financial Group||773|
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The scores are based on a 1,000-point scale, and the closer a company is to 1,000, the better the rating.
State Farm, Nationwide, Northwestern Mutual, Pacific Life, and Mutual of Omaha are the top five companies for customers, including college students.
Although MetLife is America’s top-earning life insurance company, it dropped below the industry average in 2021.
Why is life insurance for college students so cheap?
Life insurance for students is more affordable because college students are usually between 18 and 25, and they have lower risks for filing life insurance claims.
Middle-aged and senior policyholders typically pay more for life insurance. However, young policyholders that have a chronic or terminal illness could face higher than average life insurance rates.
How much life insurance coverage should college students get?
College students should acquire a life insurance policy limit that’s ten times the amount of money they earn per year. According to ZipRecruiter, the average college student makes $13,500 to $52,000 per year.
Therefore, death benefits for a college student should be between $150,000 and $500,000. But these coverage amounts generate more expensive life insurance rates.
Shop around with different life insurance companies until you find a policy that fits your budget.
Do life insurance companies increase monthly rates for high-risk jobs?
Yes, they do. If you’re a college student with a high-risk occupation, your life insurance company may charge you more than average.
High-risk jobs like manufacturing, commercial trucking, and public safety have a higher risk of fatal incidents. Therefore, life insurance companies will issue more expensive rates to offset the chance of filing a claim.
Why should college students buy a return of premium life insurance policy?
Return of premium life insurance provides life insurance coverage, and it establishes a small investment after your life insurance policy expires. It’s more expensive, but the reward is worth the wait.
Your life insurance company will refund you all the monthly payments you made during the term of your return of premium policy.
You may have to pay a fee before the money is released to you. But consider a term life insurance policy that you pay for ten years or longer.
For example, if you have a 10-year term life insurance policy with a return of premium perk, you could receive ten years’ worth of life insurance payments. And if you paid $30 or more per month for ten years or longer, you could receive a lump sum in return.
Can you use life insurance claims to pay off college student debt?
Yes, you can. If you’re a college student with a family, you can rest assured that your family won’t have the burden of student debt with a life insurance policy.
Federal student loans are forgiven if you pass away, but private student loans will go to the policyholder’s estate.
Your death benefits can cover stubborn student loan debt and provide your family a way to keep their finances intact.
Should college students buy permanent life insurance?
College students can obtain permanent life insurance and maintain life insurance coverage for the rest of their lives. However, permanent life insurance is more expensive than term life insurance.
If you plan to purchase permanent life insurance, you should become familiar with the most notable policy types:
- Whole life insurance. This is similar to term life insurance, but it doesn’t expire
- Universal life insurance. A life insurance policy that doesn’t expire, with opportunities to invest based on the company’s investment choices
- Variable universal life insurance. You receive life insurance coverage, and you can make investments that affect your accumulated cash value’s growth
Permanent life insurance policies are excellent if you have a flexible budget. You can procure life insurance coverage and a cash value account.
In additon, you can take investing to the next level by purchasing universal or variable universal life insurance policies.
Can you withdraw money from a permanent life insurance policy?
Yes, you can. You could withdraw money from your life insurance account as a loan, or you can elect to withdraw all your money.
The cash value account may not be available for withdrawal for a few years. But once you’ve accumulated enough money, your life insurance company will allow you to borrow from it.
You can withdraw all your money from the cash value account, but you won’t receive the face value on the account. The life insurance company charges a fee and then gives you the difference (also known as the surrender cash value).
However, borrowing against your life insurance account allows you to take a portion of your saved money as a loan. If you don’t pay the money back before you pass away, the loan’s remaining balance is deducted from the death benefits.
What’s the best life insurance type for college students?
That depends on the individual. If college students want to save money, they should buy term life insurance with the lowest term length provided by the insurance company.
If you have a bigger budget, you can try whole life insurance. Some whole life insurance policies have monthly payments as low as $35 per month.
Are parents and legal guardians able to get life insurance on an adult child?
Yes, they can. Parents and legal guardians can carry insurance on adult children, but they must have insurable interests (reasons why they’re insuring the person).
Parents and legal guardians often support college students throughout their college careers, and purchasing life insurance is a way to ensure that burial and final expenses are covered if a fatal accident occurs.
The Best Life Insurance Companies for College Students: The Bottom Line
The top life insurance companies for college students are Equitable Holdings, MassMutual, MetLife, New York Life, and Prudential. Furthermore, these are the best companies by market share.
But J.D. Power states that the best life insurance companies for customers are Mutual of Omaha, Nationwide, Northwestern Mutual, Pacific Life, and State Farm. However, MetLife provides the least expensive rates.
The best life insurance company for college students varies. So compare multiple insurance companies until you find the perfect company for you.