You’ve just dropped $2,000 on a car. What are your options to replace it or reimburse the cost of repairs? After you have checked vehicle maintenance records and found that the car has been in good working order for two years, you might be thinking of other ways to make your money last longer—perhaps taking out life insurance. But is there any financial advantage to having a policy that protects against major losses? If so, does college students with little savings and no income need life insurance? This article addresses whether purchasing an auto or homeowners policy makes sense and answers some frequently asked questions about what a college student should do first if they decide to take this route.
Should College Students Really Buy Life Insurance? Here’s Why The Benefits Don’t Outweigh Cost Considerations Before buying life insurance, ask yourself these questions: Is my family sufficiently insured to handle significant loss? How much risk is too much? Should I purchase individual policies for each member of my household, or would a whole policy be better? Would I prefer to have coverage for specific events such as sudden medical costs? Will I need coverage for specific types of accidents? Are health care costs going up or down? Do I own cars or homes that aren’t fully stocked? Can I afford the premiums? Your answer to these questions will help determine whether you need it and who might best benefit from protection.
A Word Of Caution There is a limit to how far credit card companies can go with unpaid debt without penalty to borrowers and lenders alike, even if this amount isn’t reached by their standard terms of payment. In 2020, Bank of America announced that it would halt all but high-net-worth customers’ ability to accept overdraft fees on its debit card account. Banks like Chase were able to charge higher interest rates on credit cards but could not charge overdraft charges as usual, allowing them to continue collecting on loans held against those accounts. While banks are allowed to collect fees on outstanding balances, customers may still face penalties for their delinquency. And if debt collectors reach the debt level owed by these customers, they may hit pause on collections or charge significantly higher interest rates than usual.
This Article Was Originally Published By Investing Advisor in December 2019, which was updated February 2022. It has since appeared again February 16, 2022, in an alternate format at Forbes.com.
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