Life Insurance Child Riders: Everything You Should Know
Do I REALLY need to add a child rider to my policy?
Is it just another one of those things that insurance agents try to tack on and up-sell me?
I get it. There are a lot of riders out there that can add up quickly and make your initially affordable policy get pricey quick.
You certainly don’t need them all. You may not need ANY of them.
Buying a life insurance policy means considering how much insurance you need, how much you can spend, how many years you will need the insurance, and what type of policy will best fit your needs.
Are you purchasing a policy for just one person or a spouse as well?
Only AFTER having all the above nailed down, should you begin to look at policy add-ons?
Of the many options, the child rider is one that does turn out to make sense for a good deal of people.
Let’s explore if you are one of them.
Quick Cliff Notes Version:
- They are super affordable
- Intended to cover burial expenses and provide financial assistance to a grieving family who may not be ready to go right back to work
- Pay for only 1 rider but cover all children in family
- Very few or no medical questions on the children
- Option to convert to a permanent policy when a child reaches early 20’s with no additional medical exam.
The Reality
The thought of a child dying is not something ANYONE wants to think about.
But it does happen.
Alaska has the highest child death rate and Massachusetts has the lowest. All in all, according to data compiled by the Centers for Disease Control and Prevention, there are 16 deaths a year, per 100,000 population in the United States for children age 1 to 14.
We all want to think it couldn’t possibly happen to us but it DOES happen to someone.
Sorry to be such a downer but death is real. That’s why family protection through life insurance is so important.
What Exactly is a Policy Rider?
A rider is a way to customize your life insurance policy with additional benefits and peace of mind knowing you have a backup plan. You can think of a rider as an extra provision with additional benefits that your basic policy does not provide.
When you shop for life insurance, you’ll notice that the types of riders available vary by company and each has its own rules and costs. Some riders are available at no additional cost while some you need to pay for.
While you may need to pay an additional premium for the extra coverage, premiums for riders are usually very low as there is little if any underwriting necessary.
What are Life Insurance Child Riders?
A child rider allows you to add life insurance for your child onto your basic policy. While no one wants to ever think of losing a child, the situation does result in financial consequences along with the emotional devastation.
This term insurance rider provides coverage for final expenses if the unexpected happens. It can also allow a family some financial flexibility if the income producers some extended time off to grieve.
A child rider usually has a very inexpensive premium that may cost no more than $40 per year if you (the primary insured) qualify for preferred plus non-tobacco rates.
A child term rider works just like an individual term life insurance policy: coverage begins at a very young age and continues until the parent reaches 65 or the child reaches a specific age, whichever comes first.
Benefits of a Child Rider
Little if any underwriting. At most a few basic questions.
Life insurance coverage for your children until they reach the age of maturity. With most companies this will be 21 but some are as high as 25.
Covers all children under 1 rider premium. Additional children do not cost more to be covered.
Policy can be converted later without a medical exam into permanent life insurance. This is a VERY IMPORTANT.
The main reason people add this rider is if the unthinkable happens. What is often overlooked is the additional value having the option to convert later provides your child.
What if they develop serious health issues early in life that make obtaining coverage later very difficult and expensive? What if they are denied coverage when they need it to protect their own kids?
When converted, adult coverage can be up to 5x higher than the original amount.
They will pay rates equal to a healthy 21-year-old despite any medical conditions they may have developed. There will be no medical exam.
Things to Watch Out for When Shopping for a Rider
Eligible Children
Every company has its own rules as to which children are eligible to be covered under a rider policy. In general, kids who are between 15 days and 18 years old can be covered, although some companies set the initial age requirement at six months or allow you to cover a child up to 21 years old.
You may need to provide basic information about your children’s’ health for underwriting purposes, but this often isn’t even necessary.
You can normally use a child rider to cover biological children as well as stepchildren and legally adopted children. Any children born to you or adopted by you even after the policy is issued will automatically be covered.
Coverage Expiration
A child rider will only last until your child reaches a certain age before it expires. Most child riders expire when your child is 21 to 25 years old, depending on the company.
Most rider policies also expire if your child gets married or when you reach the age of 65, even if your child is still younger than the expiration date.
When the rider expires, your child will need an individual life insurance policy to continue coverage. They can apply for a new one on their own or take advantage of the convertibility feature we’ve already discussed.
Coverage Amount
In most cases, you will be able to choose the amount of coverage you want in increments of $1,000, each of which is called a unit.
If you want 10 units of coverage ($10,000) and you are quoted a rate of $6 per unit, your total annual premium will be $60 per year for the rider policy, no matter how many children you have in your household. Most companies let you choose anywhere from 1 to 25 units ($1,000 to $25,000 in coverage).
Covers All Children at One Price
Coverage is almost always provided for all children in your family at the same price. This means if you are quoted a $20,000 child rider policy at a cost of $9 per month, you will get the same coverage amount on all of your children for $9 per month.
It definitely makes sense to add a child rider to your policy if you have two or more children.
Full Checklist of Things to Find out from the Insurer
- Cost per unit
- # of units available
- Age range of children that can be covered
- Age range of primary insured to be eligible to add child rider
- Child expiration age
- Primary insured expiration age
- Conversion options upon child maturity
- Eligibility of all present and future children
Always remember that premiums can vary widely between companies.
That’s why it’s SO important that you understand how the different carriers might view your personal situation. Shopping around will result in you getting the best life insurance coverage for your needs at an affordable premium.
Please keep in mind that underwriting guidelines can and DO vary greatly between carriers and this is often a complicated maze for consumers to navigate.
The secret to getting the lowest rate is placing you in a policy with the company who views you in the most favorable light.
While certainly important, a child rider is only one small piece of your total insurance picture.
Considering the death of a child is certainly an unpleasant topic but it is important to consider the financial ramifications.
A child rider is an affordable means of protecting your family and it can be used to later give your grown child their own peace of mind if you convert it into a permanent life insurance policy.
I hope this article was of value to you.
If you are ready to get started, please fill out a quote request or always feel free to contact us with any questions.
We are here to help and will never pressure you in any way.
