A key reason to have life insurance is to provide a safety net for those who depend on you financially. That\u2019s why people often buy a policy after having a child. What you might not realize, though, is that you can also add that child to your own life insurance policy as a child rider.<\/p>
A child rider is an add-on to a life insurance policy that pays out a death benefit if one (or more than one) of your children passes away. This added coverage serves as a safety net for you so you can focus on your family instead of worrying about paying funeral expenses. <\/p>
Adding a child term rider onto your life insurance policy is a cost-efficient way to insure the life of your children without having to buy a separate life insurance policy. What\u2019s also practical about these riders is that they are convertible, which means they can be transformed into a permanent life insurance policy for your child.<\/p>
It might seem silly to get life insurance on a child when no one is depending on them for financial support. But there are other reasons to consider adding a child to your own policy. <\/p>
Many insurance companies allow parents to add what is called a life insurance rider to their insurance policy to provide additional coverage for their children. You can get a rider for a child, stepchild, or adopted child who is at least 14 or 15 days old, and up to age 18 or 19 years old.<\/p>
There is little to no underwriting for a children\u2019s term rider, so the child won\u2019t have to take a life insurance medical exam to be covered. However, insurers might ask a few health questions to identify high-risk children, says Josh Hargrove, a Certified Financial Planner with Insight Wealth Partners. Those with certain pre-existing conditions might not qualify for coverage.<\/p>
The rider will pay a death benefit to the parent if the child were to die before a certain age. Typically, these riders provide coverage until a child is age 22 or 25 or until marriage, whichever comes first.<\/p>
You don\u2019t have to get the rider when you buy a life insurance policy if you don\u2019t already have children\u2014you can add it later, says Kathy Pemberton, product director at Nationwide Mutual Insurance Co.<\/p>
Also, one rider will cover all of your children. You don\u2019t even have to notify the insurance company of each child you have, she says. You\u2019ll just have to demonstrate the child was within the age of coverage if you have to file a claim.<\/p>
You can add a $10,000 child rider to your term policy for as little as $4.20 per month, whereas a child life insurance policy would cost at least $45 per month or more. <\/p>
This coverage is separate from your base policy. In this scenario, if you have $500,000 coverage for yourself, the $10,000 for your child would be additional.<\/p>
A child term rider will generally add an additional $5 to $7 per $1,000 of coverage per year to your policy premium.<\/p>
For instance, if your rate is $5 per $1,000 of coverage and you buy a $15,000 child term rider, you can expect to pay about $75 a year, or $6.25 a month. Similarly, a $25,000 policy at $7 per $1,000 of coverage would cost $175 a year or about $14.58 a month.<\/p>
Most insurers allow adults aged 18 to 65 to add child riders to their term life insurance policies, though some companies require you to be older than 20 or younger than 55 at the time of application. <\/p>
In some cases, insurance companies let you add a child rider after your policy is active, but not all insurers have the same guidelines.<\/p>
Companies also have different restrictions around:<\/p>
Your children don\u2019t have to take a medical exam for you to add a child rider, but you may have to take one for the policy to become active. However, some insurance companies do ask medical questions about your children. If your child has a pre-existing condition, your rider may not cover them.<\/p>
There are several reasons why adding a children\u2019s term rider to your life insurance policy can make sense.<\/p>
The low cost of a children\u2019s term rider makes it an affordable way to be prepared for the unimaginable. However, these riders have several limitations and drawbacks that you should consider before adding one to your life insurance policy.<\/p>
The coverage amount for a children\u2019s term rider usually is limited to $25,000 or less per child. That could be enough to cover final expenses\u2014considering that the median cost of a funeral and burial is $7,640, according to the National Funeral Directors Association. <\/p>
However, it might not be sufficient to cover any outstanding medical bills or replace income for parents who want to take time off to grieve the loss of a child.<\/p>
If your children want to convert the term rider to their own policies, they likely won\u2019t be able to get much coverage. For example, a Nationwide children\u2019s term rider can be converted to a whole life policy in an amount equal to the face amount of the rider. So the maximum benefit would be $25,000.<\/p>
A State Farm rider, on the other hand, can be converted to an individual policy with a benefit of up to five times the rider amount (for a maximum of $100,000 in coverage).<\/p>
Although children\u2019s term riders usually provide coverage for a child up to age 25, the parent\u2019s age also can affect the length of coverage. Some insurers will terminate a rider once the parent who is the policyholder reaches age 65 or, in some cases, age 55. <\/p>
Parents who have children later in life could lose coverage for their children before they reach age 25. A rider also will terminate if the underlying policy terminates.<\/p>
Because insurers don\u2019t require underwriting to convert a term rider to a permanent policy, they often issue the new policy at the standard risk class. Healthy people would be better off applying for coverage on their own and going through the underwriting process. They likely would qualify for the preferred or super preferred risk class and get a lower rate.<\/p>
A final drawback to these riders is that the insurance company won\u2019t know when your child reaches the maximum age for coverage. Unless you notify the insurer to cancel the rider, you could continue being charged for it long after your child turns age 22 or 25. <\/p>
Considering these cons, along with the pros of children\u2019s term riders, should help you decide whether it\u2019s worth it to add one to your life insurance policy.<\/p>
In most cases, one child rider covers all current and future children in your household, including birth children, adopted children, and stepchildren.<\/p>
Grandchildren aren\u2019t covered under a child rider in most cases, although they may be covered if the grandparent has legal guardianship and is younger than age 55 or 60, depending on the insurer.<\/p>
You can usually buy coverage for children between 15 days and 18 years old. Riders last until your child reaches age 25 or you reach age 65 or age 75, depending on the insurer that issued your policy.<\/p>
When a child term rider expires, coverage ends. But child riders are usually convertible, meaning you or your child can choose to replace the term coverage with a permanent life insurance policy.<\/p>
Conversion amounts can be limited and expensive to convert. You may be better off shopping for a new life insurance policy. It\u2019s a good idea to compare life insurance quotes among multiple insurers to find the coverage amount you need for a reasonable price.<\/p>
Child term riders are typically designed for parents to add coverage for their children to their life insurance policy. Depending on the specific terms and conditions of the policy, some insurance companies may allow the following people to add child term riders:<\/p>
In such cases, the adult family member or guardian would need to be the primary policyholder of the life insurance policy, and they would be responsible for paying the premiums associated with the child term rider.<\/p>
Here\u2019s how many insurance companies handle child riders on term life insurance policies.<\/p>