Can You Carry a Child Rider on Term Life Insurance?
Child riders offer the opportunity to purchase insurance for all the members of the family without having individual policies on each person. Normally child riders are low-cost term coverage that adds under $100 to the annual cost of the policy. The coverage is for every child you presently have and those you might have in the future.
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Significance
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Child riders allow you to inexpensively insure your entire family but also provide a benefit to each child insured. Once the child reaches age 18 to 25, he has the option of converting his insurance to a permanent plan at standard rates for as much as 10 times the face amount of the rider.
Features
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Some insurance policies convert the child and spousal riders to paid-up permanent plans if the insured passes. Check with your insurance company to see how it treats these riders upon the death of the insured.
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Function
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A child rider not only offers coverage at an affordable rate, it also guarantees insurability. The rider allows the child to convert the plant up to 10 times the face amount, and it also guarantees that future children covered by the plan have insurance. Once the rider is on the policy, regardless of their health at birth, future children receive the same coverage. You simply notify the company of their births.
Types of Policies
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You can put a child rider on term or permanent insurance. Many families on a tight budget often build a term policy with the breadwinner as the primary insured and the spouse and children as riders.
Benefits
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Child riders are far more inexpensive to add than purchasing a permanent policy. Often the riders cost as little as $30 a year for $5,000 of coverage. There may be an additional fee to add the rider to the policy. This varies but normally runs approximately $5.
Exceptions
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There are always exceptions to every rule. Not every life insurance policy allows you to add a rider. Life insurance that covers specific loans, for example, may not allow a rider. These types of policies come from the bank or lender. Some companies also have term policies that don't allow any riders but there are not many of those. If you want to build a family policy but find your carrier won't allow it on term insurance, check with another company. Some companies don't allow you to add a rider once they issue the policy.
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References
- Photo Credit Child image by Serenitie from Fotolia.com
