Should you buy life insurance with a Children’s Term Rider?
Most people buy life insurance to protect their family, but maybe you should also consider buying a children’s term rider to provide coverage for your children.
If you are a parent with a special needs child, then you will especially want to learn more.
There are many valid reasons to buy a children’s term rider, and they are very affordable. We will explain how they work and explain the reasons why they can be a good investment.
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A Children’s Term Rider Explained
A children’s term rider is simply an optional form of life insurance coverage that you buy in addition to your primary life insurance coverage.
There are several aspects to consider when choosing a policy rider. The first is that the rider will provide term life insurance coverage for your children.
Term coverage as a rider is best because it is the cheapest form of coverage available.
A single children’s rider has the advantage of covering all your children. These riders provide coverage in increments or unit amounts. Most riders allow for $1,000 per unit. If you buy 10 units, it would provide $10,000 coverage.
Premiums are based on so much per thousand dollars. The cost is very cheap and is usually less than a couple or so dollars for the cost of each single unit.
For example, if you were a non-smoking male 30 years of age and bought a $250,000 term policy for a 20 year term, you would pay around $17.41 per month.
If you added a children’s term rider for $20,000 worth of coverage you would pay around $26.16 per month which works out to $8.75 in additional cost for the rider.
The majority of these riders will provide coverage up to between ages 21 – 25 for the child (depending on the company).
Coverage may also be limited to the age of the insured which is usually age 65. The rider would have to lapse or be converted should the insured die before the child attains the maximum age specified in the policy.
These riders can be purchased from when the child is born or a minimum of 14 days. They must also be attained before the child reaches a certain age which is usually 17 or 18 years of age.
Children’s Term Rider Conversion Feature
Most of these riders come with a conversion option which allows you or the child to convert the policy to a permanent policy.
The form of permanent insurance would be dependent on what the company offers but they are usually a Whole Life or Universal Life policy.
Most life insurance with a children’s term rider allow you to increase the permanent life coverage by as much as 5X the face value coverage of the rider.
If you have $20,000 worth of coverage on your child term rider, you could convert and increase coverage to as much as $100,000 in permanent insurance.
The term rider can be converted without any medical questions and does not require a medical exam. If your child has a serious pre-existing condition or develops one later on, they can continue to have life insurance coverage for their lifetime when the rider is converted.
Buying a Term Children’s Rider for a Child with a Disability
As many as 18% of all children born in the U.S. have a disability. When you go to buy a children’s term rider many insurers may underwrite the policy.
This means they will ask questions about the child’s health. The child may be declined for the rider or the cost of the rider will be adjusted and be more expensive.
This does not apply to every company. We know of 1 company, Principal Life Insurance, which does not underwrite children at all. This means every child would be approved for a rider regardless of their health.
This is important for every parent with a Special Needs Child and who wants to ensure their children have life insurance protection right now.
Being able to convert the policy later on when the child matures will ensure they can protect their own families with a policy.
Reasons to Buy A Children’s Term Rider
The loss of a child is almost inconceivable to any parent as the emotional impact is devastating. Unfortunately, both medical conditions and accidents claim the lives of children every year.
There are some very sound reasons to consider life insurance with a children’s term rider, including:
- Cover Special Needs Children – Special needs children could include any child that has a pre-existing condition such as autism, heart defects, spina bifida and many other medical conditions.
- Cover Student Loans – Many parents will co-sign a student loan or the child may be approved for one on their own. Should they die before these loans will still have to be re-paid and it can be financially devastating for the family.
- Covers Multiple Children – A single rider can be used to cover all your children. Most riders will include adopted and stepchildren.
- Covers Funeral and Burial Expenses – The cost of the average funeral in America is around $8,000 dollars. Having coverage would reduce the financial impact of burial costs.
- Helps the Family Financially Cope – The emotional impact on the family can be incredibly stressful for every member of your family. Having the extra coverage would allow the parents the financial opportunity to stay home longer and provide the emotional support the family needs.
Finding Affordable Coverage with a Children’s Term Rider
The most effective way to find affordable life insurance with a children’s term rider is to always use an independent life insurance agent.
Independent agents have the most options for company and policy type. Captive agents, such as State Farm, can only sell their products which are limited in scope and features.
Independent agents have access to dozens of life insurers so they can perform the comparison shopping for you. This will save you both time and money. Everyone has different needs especially if you have a special needs child or if you have a medical condition yourself.
Because every insurer has different underwriting guidelines, you want to get the best policy and at an affordable rate.
We work for you and not the insurance companies. Our goal is to find you the best policy at the lowest price.