This may not have much to do with your contract you have with the student, even though there sounds like there was no clause for such a contingency. (law.stackexchange.com)
This can be a big deal for some because you have to have sufficient cash reserves to qualify to buy into life settlements for just such a contingency. (insuranceandestates.com)
Yes, if you include such a contingency in your purchase agreement. (homebuyinginstitute.com)