Term life insurance is affordable and customizable.  You can customize a policy by its death benefit amount, term length, and with riders.  One rider that we here at Quotacy find especially important is a Child Rider.

What is a life insurance child rider?

A child rider is an “add on” you can purchase with an individual life insurance policy that not only covers the life of your children, but it can be converted into a permanent policy later on in life without the child being required to show evidence of insurability.

How do I add a child rider onto my life insurance policy?

Adding a child rider onto a policy is relatively easy.  There is typically just one form you would need to complete for the underwriting process.  In some cases, there may be an issue that forces a company to deny coverage to a child.  This is determined with the questionnaire form.  The form is made up of questions regarding the children proposed for coverage.  In addition to birth date, gender, height/weight, and the children’s doctor’s information, questions on the form can include:

  1. Have any children ever had a driver’s license suspended or revoked within the last five years or been cited for any moving violations or DUIs?
  2. Have any children ever been diagnosed with, treated for, or had symptoms of asthma, diabetes, cancer or tumor, or any disorder of the heart or blood vessels, including heart murmur?
  3. Have any children consulted, or been examined or treated at a hospital or other medical facility within the last five years?
  4. Within the last ten years, have any children used, except as legally prescribed by a physician, tranquilizers, barbiturates or other sedatives; marijuana, cocaine, hallucinogens or other mood-altering drugs; heroin, methadone or other narcotics; amphetamines or other stimulants; or any other illegal or controlled substances?
  5. Have any children received counseling or treatment regarding the use of alcohol or drugs including attendance at meetings or membership in any self-help group or program such as Alcoholics Anonymous or Narcotics Anonymous within the last ten years?
  6. Are any children receiving special training because of physical or mental disability, or unable to participate actively at work, or in school, or to perform normal activities?

Every insurance company’s child rider is a little different, but one benefit of purchasing a child rider, doesn’t matter from which company, is that it covers all your current (under the age 18) and future children with just one rider.  You do not need to purchase a separate rider for each child.

The aspects of a child rider that can vary from company to company include:

  • The minimum and maximum issue age for the primary insured (the parent)
  • The minimum and maximum age in which a child is insured
  • The minimum and maximum face amount
  • How much permanent coverage the rider can be converted to
  • The cost of the child rider

Let’s look at some examples to really understand what all that means.

Example 1

John Smith is 35-years-old and wants to purchase a 30-year $500,000 term policy on himself from AXA.  He also wants to add a child rider to his policy so his two-year-old son and unborn daughter are insured just in case the worst should happen.  AXA would require John to fill out a questionnaire about his children before approving the rider coverage.

AXA’s Child Rider Product Guidelines*:

  • The minimum age a parent can be to buy a child rider is 18 and the maximum is 55.
  • The minimum age a child can be to be insured is 15 days and they would be insured up to, but not including, their 25th birthday.
  • The minimum face amount that can be purchased is $10,000 and the maximum is $25,000.
  • The rider can be converted to a permanent policy with a face amount up to the maximum of the rider: $25,000.
  • A $10,000 rider costs $52.50 annually (less than $5 each month).

If John added a $10,000 child rider to his policy, his two-year-old son would be insured for $10,000 and once his daughter is born and 15 days old, she would automatically be insured for $10,000.  Once John’s son turns 25-years-old, his son will lose coverage (unless he converts) but his daughter will still be covered until her 25th birthday.

John can convert these riders to permanent policies for his children without having to prove their insurability, as long as he does so after their 18th and before their 25th birthdays.  Typically parents will also transfer ownership of the policy to the child, but John has the option of continuing to own the policy if he wants to.

Example 2

Jim James is 40-years-old and wants to buy a 20-year $500,000 term policy on himself from Prudential.  He also wants to add on a child rider.  He has an 18-year-old son from a previous marriage and a one-year-old son from his current marriage.  Prudential would require Jim to fill out a questionnaire about his children.

Prudential’s Child Rider Product Guidelines*:

  • The minimum age a parent can be to buy a child rider is 18 and the maximum is 55.
  • The minimum age a child can be to be insured is 14 days and they would be insured up to, but not including, their 25th birthday.
  • The minimum face amount that can be purchased is $10,000 and the maximum is $100,000.
  • The rider can be converted to a permanent policy up to 5 times the amount of the child rider.
  • A $10,000 rider costs $51.50 annually.

If Jim added a child rider to his policy, his 18-year-old son would be covered up until his 25th birthday but his one-year-old son would only be covered by the rider up until he is 21-years-old since Jim’s policy is a 20-year term policy.

Example 3

Jane Doe is 45-years-old and wants to buy a 20-year $500,000 term policy on herself from Principal.  She also wants to add a child rider to her policy so her children are insured as well.  She has three children: twin boys aged 15 and a daughter who is 22 years old.  The child rider would insure her twin boys, but because her daughter is older than 18-years-old she would not be insured under the child rider.  Principal does not require any information, health or otherwise, on children in order to become insured under a child rider.

Principal’s Child Rider Product Guidelines*:

  • The minimum age a parent can be to buy a child rider is 20 and the maximum is 55.
  • The minimum age a child can be to be insured is 15 days and they could be insured up to, but not including, their 25th birthday.
  • The minimum face amount that can be purchased is $5,000 and the maximum is $25,000.
  • The rider can be converted to a permanent policy up to 3 times the amount of the child rider.
  • A $10,000 rider costs $50 annually.

If Jane added a $25,000 child rider to her policy (which costs $125 annually), both her boys would be insured for $25,000 until their 25th birthdays, after which, Jane’s policy premiums would decrease $125 annually since the child rider would drop off if she had no other children to insure.  The rider can be converted into permanent policies up to face amounts of $75,000, as long as it is done before the boys’ 25th birthdays.

Each company’s riders are similar; however, one unique benefit Principal offers is that fact that they don’t require any information about the children, so any current children (under age 18) or future children (once they reach 15 days old) are covered regardless of health.  This benefit is especially advantageous for parents with special needs children or children with medical issues.  For example, let’s say Jane Doe had her twin boys, her 22-year-old daughter, and a seven-year-old daughter who was diagnosed with leukemia.  Her daughter would be able to be insured under Principal’s child rider for $25,000 and would still even be able to convert to a $75,000 permanent policy later in life.

Summarizing Child Riders

To sum-up child riders:

  • Child riders insure the children of an insured.
  • Only children years 18 and under at issue can be insured under a child rider.
  • Child riders guarantee the future insurability of the insured’s children until the conversion period expires.
  • Child riders automatically cover any future children you may have.
  • Child riders insure child up to maximum age (typically 23-25 years old), or until the parent stops paying the premium, or until the parent’s term policy is up, or until the parent turns 65, whichever comes first.
  • Child riders need to be converted into a permanent policy before maximum age.
  • At conversion, the parent can transfer ownership to child or continue to own it themselves.

If you are interested in adding a child rider to your policy when you purchase, you can easily do so through Quotacy.  You’ll be asked on one of the forms if you have children and if you would like to add a child rider.  Your Quotacy agent then goes to work to make sure you get the right forms and keeps you updated every step of the way as your application moves through the life insurance buying process.  Start by getting a term life insurance quote today.

*These product guidelines are current as of 1/24/2017

 

Photo credit to: Heather Williams

 

Related Posts:

Buying Life Insurance on Your Children

Life Insurance Coverage for Children

Financial Planning for Parents of a Special Needs Child

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