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.
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 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.