What type of rider may be used to include coverage for children under their parents life insurance policy?

Children and infants are a common debate in the life insurance industry: Does a baby need life insurance? Is it worth it? The one choice most can agree on is to be sure other critical financial obligations have been met such as a savings account, life insurance policies for the parents, and the juvenile’s higher education fund. After these primary obligations, the parents should consider additional financial security for their children.

CAN YOU BUY LIFE INSURANCE FOR A CHILD?

Yes. Child coverage is mostly available through a whole life or juvenile life insurance policy. These policies typically have less coverage ranging from $1,000 to $25,000 and can be active from the child’s birth date through death date.

A child rider option may be available through your or your spouse’s life insurance policy depending on your insurance provider. A “rider” means the child is added to the parent’s policy at an additional cost and gets his or her own benefit, usually a lower amount. Age requirements for child riders vary with every company, so be sure to check for it if you’re considering adding your child.

JUVENILE LIFE INSURANCE ADVANTAGES

Benefit amounts and buying processes vary from company to company, but buying life insurance for a child can be very valuable.

FINAL EXPENSE COVERAGE

Should something happen, a final expense payout can help cover a child’s funeral, possibly fund family grief counseling, and help supplement income for the parents’ time away from work.

CHILDREN ARE EASILY INSURABLE

Adults who buy life insurance have to consider their health, health history, family health history, and lifestyle habits. However, most newborns and children are the youngest and healthiest they’ll ever be in their life, therefore they are typically easier to insure.

POLICIES CAN BE CHEAP

Not only do children tend to have an easier time qualifying for life insurance, they can also have the lowest premiums rates on the market. Most companies lock in a child’s premium rate, meaning the child would not be subject to rate increases that correspond with age and health over time. For the same amount of coverage, the premium for a child will generally be less than the cost if they waited and purchased the coverage later in life.

CASH VALUE BENEFIT

Some life insurance policies have a cash value benefit. Later on, a policy loan could be used to help pay for college or a wedding. A loan policy comes with great consideration, so be sure to inform your child of the impacts beforehand.

JUVENILE LIFE INSURANCE DISADVANTAGES

As with anything, there are skeptics who are against juvenile life insurance policies for a few reasons.

LOW CHILD MORTALITY RATES

According to the CDC, approximately 12,000 children and young adults, ages 1 to 19 years, die from unintentional injuries each year. While most skeptics would use this to prove child death is unlikely, this number only includes unintentional injuries, not cancer and other critical illnesses.

HEALTHY ADULTS ARE INSURABLE

A juvenile life insurance policy is appealing because you could potentially lock in the rate while your child is young. Those against juvenile life insurance argue most adults in their 20s to 30s are insurable and can still qualify for relatively inexpensive premiums.

COLLEGE SAVINGS ACCOUNT

Cash value is appealing to parents because it acts almost as an asset fund should they need it. However, financial advisors who beg to differ believe there are better ways to save for those expenses such as savings and investments accounts.

While securing financial coverage for their children is a priority for some parents, it may not be to others. There is no “one size fits all” when it comes to insurance. Any life insurance purchase comes with heavy consideration and those looking to buy should be well informed about their purchase.

Categories: Life Insurance, Term Life Insurance, Whole Life Insurance

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How does a child term rider work?

You may add a child rider that covers your children from the time they're two weeks of age up until they turn 26 (age limits may vary by insurer). The child rider is also known as a child term rider since coverage is limited to a term based on the child's age. You can choose to add a child rider for your biological kids, adopted children, or stepchildren, and one rider typically covers all your children. If the worst happens and your child dies while under the term age limit, you can file a claim for the rider's small death benefit, which is designed to cover funeral expenses, medical costs, or income gaps while you grieve. When your child reaches the age limit of the rider, they may have the option to convert it to their own life insurance policy, which may help them lock in a lower premium.

One child rider usually covers all of your kids.

How much does a child insurance rider cost?

Child life insurance riders may add as little as a few extra dollars to a monthly premium, and they typically cost the same regardless of how many children are covered. A child rider is much more affordable than taking out a standalone life insurance policy for your child since the rider will provide a smaller payout. Adding a child rider to your term or permanent life insurance can provide you with an affordable safety net in case the unimaginable happens and you need financial support while grieving.

What is a spouse rider?

A spouse rider works similarly to a child rider by providing a death benefit if your spouse passes away while the rider is active. There are usually higher coverage options for a spouse rider than for a child rider; therefore, adding a spouse rider will likely be more expensive than adding a child rider.

A spouse rider's beneficiary is typically the policyowner and would likely provide a smaller death benefit than if your spouse got their own life insurance policy. But if your spouse is older or has health issues that make it expensive for them to qualify for their own policy, adding a spouse rider to your policy could be a way for them to get some affordable coverage. A spouse rider typically ends with the policy term, so spousal life insurance coverage will only be in effect while you're still alive and the policy is active.

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