If I pass away could my life insurance be used to pay towards the cost of my student loan debt even though it was cancelled?

Question Details: I am on disability and had over $200,000 of student loan debt written off due to my health. I am divorced and engaged to another woman. I have been informed by NELNET, the provider, that in 3 years it will be considered income and we are concerned whether I will have to pay taxes on it and, if so, could my insurance be taken to pay the taxes in the event of my death? My fiance is the only designated beneficiary at the time on my $160,000 policy. Any assistance you can provide would be greatly appreciated. I have contacted the IRS and they said it depends on what happens between now and the next 3 years as to the student loan being filed as income for tax purposes.

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