Child Rider Life Insurance is an exception that can be included in the life insurance policy of a parent to extend and give coverage to their children. What’s more, this additional rider is designed specifically to provide financial security to families in the event of the untimely death of their child.
In other words, to ensure the funds are accessible for funeral expenses coverage and other financial needs. In this blog post, we will understand what this type of coverage is, how it works, its cost, its benefits, and drawbacks, and how you can add a child to your existing life insurance policy for coverage.
What is Child Rider in Life Insurance?
A child rider is a term in life insurance, and it is an optional add-on to the life insurance policy of a parent to offer coverage to their child or children. Generally, this additional rider provides death benefits in case the covered child passes.
Meanwhile, the policy terms and coverage amount can differ depending on the type of policy and the insurance company or provider. Nevertheless, parents can still broaden their life insurance coverage to their children without having to buy a different and separate policy for every child or kid.
How Does It Work?
To begin with, when a parent adds a child rider to their life insurance quote, it offers a death benefit in case the insured child passes away. The coverage is usually term-based. In other words, it is active for a particular period or until the child reaches a specific age.
Thus, if the child passes while the rider is still active, the insurance company will pay the policyholder or parent a payout. The payout from the insurance company can be used for medical bills, funeral costs, and other associated expenses.
However, child riders only cover children under a specific age and might enable adding new kids to the existing coverage without the need to change the primary life insurance quote.
How Much Does a Child Rider Cost?
Generally, a child term rider will lead to an extra $5 to $7 per $1,000 of your policy’s coverage annually. For example, if your insurance premium rate is $7 per $1,000 for coverage, a $25,000 quote will cost $14.58 per month and $175 per year.
Nonetheless, the cost of a child rider depends on the insurance company and the amount of coverage. Factors like the age and number of children also affect the overall cost of a life insurance policy for parents.
Pros and Cons of Child Rider Life Insurance
Here are the benefits and drawbacks of a child term rider on a life insurance policy:
Benefits:
- Financial protection.
- Cost-effective.
- No medical exam is required.
- Simplicity.
- Conversion option.
- Peace of mind.
- Flexible coverage.
Drawbacks:
- Coverage is only term-based.
- Additional documentation.
- Limited coverage.
- Limited conversion amounts.
- Potential early coverage termination.
- Expensive policy conversion.
- Age restrictions.
Is A Child Rider Worth It?
The answer to whether or not a child rider is worth it depends on the priorities and circumstances of an individual. For parents, a child add-on is accompanied by peace of mind and financial protection, especially for their children.
Secondly, getting on is cheaper and easier, unlike getting separate insurance coverage for them. Nevertheless, it is crucial to consider whether getting a rider meets the financial needs and other financial arrangements like health insurance and emergency savings. You can reach out to an insurance advisor for assistance and review your financial goals to find out if Child Rider is a good option.
How to Add Get Child Rider to Your Life Insurance
If you would like to add a Child Rider to your current life insurance policy as a parent, here are the steps you need to begin:
- Go through your existing life insurance policy to find out if riding is available as an option.
- Talk to a financial advisor or your insurance agent to understand the costs and coverage options.
- Get a quote.
- Fill out the forms with the necessary documents and information.
- Check the terms and conditions of the rider.
However, before finalizing, make sure that you understand the coverage terms and the details are correct.
What Happens When a Child Term Rider Expires?
When and if a child term rider expires, the insurance coverage for the child also ends; therefore, death benefits will be paid out for the child to the parent. However, this usually happens if the child has reached a particular age or when the add-on reaches its limit. At this time, the child will no longer be covered under the rider.
Meanwhile, if the parent wants continuous coverage, they can check out other alternative options. Besides, some term policies come with a conversion option. This allows the rider to be changed to a permanent policy. So, if this option is available, as a parent, you can choose to convert your policy or purchase a separate policy for your kid for continued coverage and protection.
In Conclusion
A child rider can be a beneficial option to add or include to a life insurance quote, as it provides financial protection for children at an affordable cost. It is important to understand how it works, how much it costs, its implications, and if it is worth it based on your financial situation and other considerable factors to make the right decision.