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Student Loan Debt Could Be Reshaping U.S. Life Market: Haven Life Survey

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Student loan debt might be hurting U.S. life insurance sales by reducing the number of young adults going through the kinds of major life events that lead to purchases of life insurance.

(Related: Haven Life Finds Big Male-Female Life Coverage Gap)

Haven Life Insurance Agency LLC, an arm of Massachusetts Mutual Life Insurance Company, uncovered evidence of the student loan effect recently when it conducted a survey of student loan borrowers.

The Survey

The sample included 396 people ages 22 through 45, with a median household income of $41,000 and a median age of 30. All of the survey participants had student loan debt.

Haven Life has used the survey results to draw attention to the idea that many student loan borrowers have used their parents as loan cosigners, and that the cosigners may still be on the hook for paying back the loans if their adult children die. The company is suggesting that the adult children who took out the loans should protect their parents against that catastrophe, by buying term life insurance.

The Impact of Student Loan Debt

Haven Life asked the survey participants to describe how their student loan debt has affected their ability to meet major financial milestone.

The top answer might be one that could increase consumer demand for accident and health insurance: 60% said student loan payment obligations kept them from saving for emergencies.

Another top answer could reduce demand for annuities, and for life insurance-based income planning arrangements: 49% said student loan debt has kept them from saving for retirement.

Two other answers were less common but could reflect a structural change in how much life insurance and disability insurance young adults need: 28% said student loan debt had caused them to put off having children, and 20% said student loan debt had caused them to put off getting married.

Other Research

The Haven Life survey results support what academic economists have been saying. In 2015, for example, Michael Nau and colleagues concluded in a paper published in  the journal Research in Social Stratification and Mobility that a $1,000 increase in student loan debt led to a 1.2% decrease in the likelihood that a woman would become a parent in any given year.

A woman in that study had a 4.5% chance of becoming a parent in any given year if she had no student loan debt, and a 2.5% chance of becoming a parent if she had $60,000 in student loan debt.

The MIB Group Inc., a life insurance industry data-sharing organization, has reported that life insurance application activity trends have been much worse than trends for consumers ages 45 and oder for years.

MIB does not adjust the activity figures it publishes to reflect changes in the number of people in each age group, but it’s possible that the weak application activity levels for the younger consumers reflect the effects of student loan debt, delayed child-bearing or similar factors as well as changes in the number of people in each age category.


A summary of the Haven Life survey results is available here.

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