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What is a Child Term Rider in Life Insurance?

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As a parent, one of the most challenging things to consider is the financial burden if the unthinkable were to happen and you lost a child. Though no amount of money could ever make up for such a tragedy, adding a child rider to your life insurance policy can provide some financial assistance.

When adding the policy rider to your life insurance policy, it allows you to choose a small amount of death benefit coverage that would payout if one of your children passes away. It gives you the security of knowing you have a financial safety net in place if faced with the devastating loss of a child.

This guide will walk you through everything you need to know about child riders on life insurance to decide if adding this supplementary coverage is suitable for your family.

What Are Child Riders for Life Insurance?

A child rider is an additional provision to a life insurance policy that designates a certain amount of temporary life insurance coverage for all the minor children in your household. It “piggybacks” on the parent’s primary policy so that if one of your insured children dies, you receive a separate tax-free death benefit payout.

Unlike individual life insurance policies you can purchase for children, such as the popular Gerber Life Grow-Up Plan, a child term rider is linked to the parent’s or guardian’s policy rather than requiring separate applications for each child. Coverage bundling tends to cost significantly less than multiple-child life insurance policies.

One child term rider typically covers all biological children, stepchildren, and legally adopted children of the insured parent for one fixed rate. It can provide you the peace of mind that there would be some financial assistance available in the grief-stricken event you lose a son or daughter.

How Do Child Riders Work?

Adding a child term rider to your life insurance policy is often done when first purchasing life insurance coverage. In some cases, insurers allow policyholders to add on a child rider afterward, but this is less common.

When opting for life insurance coverage for your children as a rider to your policy, you will have to complete a simple one-page supplemental form requiring basic information about your children. While children are never required to complete a medical exam, most applications for child rider life insurance coverage will have you answer a few health questions about your children. 

The child rider provides a preset death benefit amount, such as $10,000 or $25,000, for each child covered in the event of their passing. If an insured child passes, you will file a claim just as you would on the base life insurance to receive a death benefit payment.

Since children have substantially lower mortality rates than adults, adding a child life insurance rider to your life insurance policy tends to be quite affordable. Depending on the insurance company, a $25,000 child term rider might cost an extra $50-100 annually. This manageable additional premium could offer you some financial assistance in the devastating circumstance of losing a child.

Types of Child Life Insurance

There are two main options for insuring the lives of children – child term riders or standalone child life insurance policies.

FeatureChild Term RiderChild Whole Life Insurance
Type of CoverageTemporary life insurance coverage linked to a parent's policy.Permanent, individual life insurance policy for each child.
Coverage DurationExpires when the child reaches a certain age (usually between 18 and 25 years old).Lifelong coverage with a guaranteed death benefit.
PremiumsLower cost; added to the parent's main policy premium.Higher cost; fixed premiums for each child's individual policy.
Coverage AmountTypically limited (e.g., $10,000 to $25,000 per child).Can be higher and varies based on the policy chosen.
Number of Children CoveredOne rider can cover all children in the family, including future births or adoptions.Each child requires a separate policy.
Cash ValueNo cash value accumulation.Accumulates cash value over time which can be borrowed against or used in the future.
Conversion OptionsOften allows conversion to a permanent policy when the child reaches adulthood.Not applicable as it is already a permanent policy.
Underwriting ProcessGenerally no separate underwriting for children; attaches to parent's policy.Requires individual underwriting for each child.
PurposePrimarily to cover final expenses in case of a child's untimely death.Offers both death benefit and potential for cash value growth as a financial tool.
FlexibilityLimited flexibility; tied to the term of the parent's policy.High flexibility; policy remains with the child throughout their life.

Child Term Rider

A child term rider provides temporary life insurance coverage for all dependent minors linked to your adult life insurance policy. The key features include:

  • Term coverage expires once children reach a certain age, typically between 18 and 25 years old.
  • One rider covers all unmarried children, including future children born or adopted, while the policy and rider are active.
  • Convertible to a permanent life insurance policy when they reach the age at which they are not eligible to be a child rider.
  • Premium costs are added to the main policy and are less expensive than individual child policies.

Child Whole Life Insurance

In contrast, a children’s whole life insurance policy is a separate, permanent policy just for one child. The main characteristics include:

  • Lifelong coverage with guaranteed death benefit and fixed premiums.
  • Each child needs their own individual policy.
  • Features living benefits and cash value accumulation.
  • Death benefits may automatically increase when the child reaches a specific age.
  • Higher premium costs than child term riders.

Unless there is a specific need for your child to have permanent coverage, a child term rider is generally the most practical and affordable way to provide life insurance for your children.

Why Should You Buy a Child Rider?

Given the unimaginable worst-case scenario of losing a child, a child life insurance rider can ease some of the emotional and financial strain on a family. There are several compelling reasons to consider adding this supplementary coverage:

  • Affordable peace of mind: The cost is relatively low, especially considering the benefits. For less than the cost of a cup of coffee per month, wouldn’t some financial cushion to cover unexpected expenses help in a time of mourning?
  • All children covered: One rider covers all your kids, including future children born or adopted, while the policy and rider are active. No matter the number of children you ultimately have, the rate is fixed and not based on bundled coverage, which keeps costs down versus individual policies.
  • Continued insurability: If health conditions later arise, your children are guaranteed ongoing coverage under the child rider. Most child term riders even allow children to convert to permanent life insurance later in life.
  • Final expenses assistance: Though no amount of money could ever make up for the loss of a child, the benefit could help subsidize substantial hospital bills, funeral costs, or counseling without further financial strain.

Understanding The Life Insurance Child Term Rider

It’s beneficial to comprehend exactly what protection a child rider can provide, who is eligible, and how benefits are handled.

Tax Implications and Coverage

The death benefit payout from the child rider almost always qualifies for exclusion from federal taxes. This means the lump sum payment you would receive if faced with using this safeguard for your family would not count as taxable income.

For most policies, a child rider only applies to biological and legally adopted children. However, some insurers extend eligibility to stepchildren or grandchildren if a grandparent holds the policy and the life insurance company offers the policy rider.

Verify coverage specifics with your insurance provider or agent, as they can clarify what qualifies regarding children’s term insurance riders and any age limitations on grandchildren.

Conversion to Permanent Life Insurance

Depending on the insurance company and policy details, the child rider may include an option to convert to a permanent life insurance policy for each child as they reach adulthood, typically between 18 and 25 years old. This ensures ongoing coverage that does not expire even after they age out of the rider terms.

The conversion process allows children to get permanent insurance without new health underwriting, which could be more complicated or result in higher premium costs depending on emerging health conditions.

While term life insurance is generally the most practical, especially for young families, this conversion option guarantees insurability with the opportunity to increase the total face amount up to five times the amount the child received with the original rider.

Eligibility and Benefits

The eligibility requirements and benefits of child term riders can vary slightly across insurance companies, but they generally include:

  • Parent’s Age When Adding a Rider: Typically 18 to 65 years old.
  • Child’s Age Eligibility: Coverage usually starts as early as birth and continues until at least age 18.
  • Covered Dependents: Generally includes biological and legally adopted children.
    Child’s Health Considerations: While many insurers do not require a medical exam for children, some may have health-related criteria or exclusions. It’s important to check with the insurer for any specific health requirements or limitations.

The benefits of adding the supplementary coverage for your children include:

  • Financial support if faced with a child’s death.
  • Affordable premium costs, often $100 or less annually.
  • All current and future children are covered with no added underwriting required.
  • Conversion possibility to permanent life insurance policy with opportunity to increase coverage.

Potential Drawbacks of Child Term Riders

Before deciding if this type of contingent coverage aligns with your family’s needs and budget, be aware of a few potential disadvantages:

  • Limited coverage amount: The death benefit typically max out at $25,000 per child, which may not fully cover all final expenses and ongoing costs for surviving family members.
  • Adds extra expense: Although an affordable way to provide coverage to multiple children under one policy, the extra rider still represents added insurance costs each year.
  • Age restrictions: Eligibility for coverage ends when children reach ages varying by policy from 18 to 25 years old.
  • Opportunity cost: Weigh the money going toward premiums against setting aside funds in other ways, such as college savings accounts.

For some families, these constraints could make a child rider less useful or harder to justify than other financial priorities. Carefully assessing the pros and cons allows you to make the optimal judgment.

Cost Considerations of a Child Term Rider

Since a child rider attaches to your life insurance policy and covers all your children, it is a fraction of what multiple child life insurance policies would cost. You can typically insure each child for $25,000 or more for less than $100 extra per year.

For example, a $10,000 term life insurance child rider may charge around $50-60 annually. In contrast, an equal amount of permanent, individual coverage could run 10 times as much. Even higher benefit amounts of $25,000 per child often stay under $100 yearly with a rider.

If you have three kids, buying separate child policies with $15,000 death benefits may charge over $500 per year. But adding a $15,000 rider could less than double your base policy premium. For pennies a day, wouldn’t some extra security make sense?

Decision Making

In deciding if protection for your children aligns with your family’s insurance priorities, weigh factors like affordability, the number of kids and their ages, whether you already have sufficient life insurance, and if you anticipate health changes.

If you have young children or intend to grow your family further, getting coverage through a child rider locks in insurability. By passing away the extra premium costs across years of eligibility per child through their late teens or mid-20s, the cumulative expense stays reasonable relative to permanent child policies or potentially paying funeral costs out of pocket.

Work through a break-even analysis comparing the rider premium totals paid over decades per child against projected unpaid funeral costs. Are you honestly better off investing monthly savings elsewhere, or would it be worse to wind up without this contingency in place?

What Happens When a Child Term Rider Expires?

Once the maximum age limit hits, often between 18 to 25 years, depending on specific policy terms, the child rider coverage ceases for that son or daughter. This differs from whole life insurance, which offers lifelong protection. But it does come at a lower cost while children remain your financial dependents.

Several insurers provide an option or requirement once the term rider expires to convert to a permanent life insurance policy for your children. This ensures ongoing coverage even after they age off the rider terms. Typically insurers allow conversion to total death benefits up to five times the original child rider amount.

For example, if you had a $10,000 term rider, it may convert to as much as $50,000 in whole life insurance for each child. Review particulars with your insurance provider so you know specifics on conversion ability, options, costs, and age cutoffs for your policy’s child rider terms.

Conclusion

Losing a son or daughter is every parent’s worst fear. Nothing can ever make that immense loss whole. But a child rider on your life insurance allows some financial resources to help cover final expenses without further money stress during terrible grief.

While not right for everyone, a child rider can provide temporary coverage at a low cost if having funds earmarked specifically for your children in a worst-case event makes sense for your family’s situation. Take time to carefully assess its value and priority for you before making any insurance decisions.

Connect With A Licensed Agent

If, after assessing your needs and options, you decide you want to move forward with securing child rider coverage, contact No Medical Exam Quotes to speak with a licensed agent today.

Founder Jeffrey Manola has over 10 years of experience as an independent agent contracted with over two dozen national life insurance carriers. He will be happy to discuss your situation, answer any questions, and help you determine the optimal coverage for your family.

Reach Jeffrey directly at 888-777-7574 or get an instant quote on child rider policies. As an independent agency, No Medical Exam Quotes has access to a range of reputable insurance companies with competitive products designed to fit your needs and budget.

Frequently Asked Questions

In some cases, yes. Talk to your insurance company or agent to find out if post-issue additions are possible and any eligibility rules around ages.

No. Since coverage attaches to your policy, only you, as the parent, may need an exam for policy approval or higher coverage amounts. However, you will need to answer health questions on all children to be covered under the rider.

Death benefit maximums fluctuate between $10,000 and $25,000 per child by insurer. You should be able to customize the amount you want to add within set parameters.

No. IRS guidelines generally treat a child rider insurance disbursement as a tax-free death benefit if guidelines are followed.

The average cost of a child rider is often only $50-100 per year, covering all your kids. Compare standalone child policy premiums closer to $500+ annually.

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Jeffrey Manola - Life Insurance Expert
Jeffrey Manola - Life Insurance Expert

Jeffrey Manola is the founder of No Medical Exam Quotes, an online insurance agency that strongly focuses on helping people shop for the perfect life insurance policy. He is a licensed life insurance expert and content creator for the website.

Before becoming a life insurance agent, he served in the United States Marine Corps, transitioning from serving his country to helping families find affordable life insurance coverage beginning in 2009. Since starting a career as a licensed life insurance agent, Jeffrey has helped thousands of families with their life insurance needs.

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