Student Loan Protection Rider for Disability Insurance Policy
by Gary Fegan
Student loan debt is a crisis of epic proportion! At this time, student loan debt is the second highest consumer debt category - behind only mortgage debt. We Americans continue to borrow at unprecedented levels to continue or education. In fact, there are more than 44 million borrowers with $1.3 trillion in student loan debt in the U.S. alone.*
The most staggering student loan debts are created by doctors and attorneys. The cost of college and graduate school has propelled their student loans to unprecedented heights.
Students who graduated from M.D.-granting schools in 2014 and had debt owed nearly $180,000 on average, according to a report from the Association of American Medical Colleges.(May 19, 2015) For lawyers, when you total up the seven years of schooling, you are looking at costs between $150K and $400K, and perhaps much more. Many law students are forced to take on private loans to supplement their federal aid which greatly increases their obligation to repayment when starting their careers. These numbers do not even take interest into consideration which inflates these numbers even much greater.
Many people have no choice but to borrow the money to pay for their higher education expense, but it has caused serious financial consequences for many that do. Consider the following three statistics relating to delinquency in student loans:
1. Student Loan Delinquency or Default Rate: 11.2%**
2. New Delinquent Balances (30+ days): $32.6 billion**
3. New Delinquent Balances - Seriously delinquent (90+ days): $31 billion**
You do not want to be included in these last three statistics! Please see some average student debts by states below:
What you need to know to protect yourself from this financially devastating epidemic in our nation! You need to obtain student loan protection in the event of a disability. This protection will act as a safeguard so you will be able to always meet your student loan payments!
Disability Insurance offers you the financial protection from the myriad of things that could hinder your ability to earn a living. Most people think that disability does not happen to younger people and that most disabilities are due to work-related accidents. In actuality, the odds of having a long-term disability (one that lasts 90 days or longer) before age 65 are as significant.
- Just over 1 in 4 of today’s 20 year olds will become disabled before they retire.1
- Approximately 90% of disabilities are caused by illnesses rather than accidents.2
- The average disability claim lasts 31.6 months.3
- One in eight workers will be disabled for 5 years or more during their working careers.4
Probability of a Disability lasting at least 90 days
Death between the age shown in the table and age 65
|More likely to become disabled than to die (%)|
Social Security Administration, Fact Sheet March 18, 2011
You are most vulnerable early on in your career. As you begin your professional career, your income is just beginning to grow, and your unpaid student loan debt is at its highest level. You are very vulnerable if you become disabled at this point.
Guardian’s Provider Choice policy (Premier and Select) offers an optional Student Loan Protection Rider that will allow you to:
- Obtain additional coverage- up to $2,000/month*** above what you may otherwise qualify for based on your income
- Tailor coverage to your specific debt- reimburse $250-$2,000 per month toward student loan payments**
- Choose a rider duration- 10 or 15 years****
** As of 4Q 2016, New York Federal Reserve
*** Reimburses $250-$1,000 per month toward student loan debt incurred from a degree-granting institution; $250-$2,000 if pursuing or holding an advance degree (ie: degree beyond undergraduate).
****This rider provides coverage for a period of 10 or 15 years from the policy date. When a qualifying total disability occurs, benefits are only payable during the remaining portion of the 10- or 15- year term that has not elapsed when the disability begins.
1. U.S. Social Security Administration, Fact Sheet February 4, 2013.
2. Council for Disability Awareness, Long-Term Disability Claims Review, 2012.
3. Gen Re, U.S. Individual DI Risk Management Survey 2011, based on claims closed in 2010.
4. Commissioner’s Disability Insurance Tables A and C, assuming equal weights by gender and occupation class.
Individual disability insurance policy Forms 18ID, 18UD, and 18GI underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Product provisions and availability may vary by state. In New York: These policies provide disability insurance only. They do not provide basic hospital, basic medical or major medical insurance as defined by the New York State Insurance Department. For policy form 18ID, the expected benefit ratio is 50%. For policy forms 18UD, 18GI, 18UD-F, an 18GIF,the expected benefit ratio is 60%. The expected benefit ratio is the portion of future premiums that the company expects to return as benefits, when averaged over all people with these policy forms.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 1901 Research Blvd, Suite 400, Rockville, Maryland 20850. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor, (240) 683-9700. James Fegan, Financial Representative. The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Financial Balance Group is not an affiliate or subsidiary of PAS or Guardian. PAS is a member FINRA, SIPC.
2018-53118 Exp 01/20