What Happens to the Coverage Under a Children’s Term Rider?

A children’s term rider is an additional provision that can be included with a parent’s or guardian’s life insurance policy. This rider extends temporary life insurance coverage to eligible children under the main policy. It offers a cost-effective way to provide a modest death benefit for each child covered, typically intended to help with potential expenses like funeral costs.

Coverage Expiration and Age Limits

Children’s term riders are designed to provide temporary coverage and typically have a predetermined expiration age for the child. The coverage simply ends when the child reaches this specified age, which commonly ranges between 18 and 25 years old. The exact age limit is detailed within the policy contract. This expiration means the rider’s coverage terminates automatically, and no further action is generally required from the policyholder regarding that particular coverage.

Some policies may also specify that the rider expires when the primary policyholder reaches a certain age, such as 65, or when the child marries, whichever occurs first. The temporary nature of these riders means they do not accumulate cash value, unlike some standalone permanent life insurance policies.

Conversion to Permanent Coverage

Many children’s term riders offer the option to convert the temporary coverage into a standalone permanent life insurance policy for the child. This conversion privilege typically becomes available as the child approaches the rider’s expiration age. A key advantage of this conversion is that it usually does not require a medical examination or new underwriting, making it valuable even if the child’s health has changed. This ensures the child’s insurability into adulthood, regardless of any health conditions that may have developed.

The types of permanent policies commonly offered for conversion include whole life and universal life insurance. These permanent policies provide lifelong coverage and may also build cash value over time. Premiums for the newly converted permanent policy will be determined by the child’s age at the time of conversion, the type of policy selected, and the chosen coverage amount. While the rider itself is generally affordable, the premiums for a permanent policy will be higher due to the lifelong coverage and cash value component. The maximum amount of coverage available for conversion can vary by insurer, sometimes allowing for up to five times the original rider’s face amount.

Effect of Primary Policyholder Changes

Events affecting the primary policyholder’s life insurance policy can influence the status of the attached children’s term rider. If the main life insurance policy lapses due to non-payment or is surrendered by the policyholder, the children’s term rider typically terminates as well. This occurs because the rider is an add-on to the base policy and is dependent on its active status.

In the event of the primary policyholder’s death while the rider is active, specific provisions often come into play. The children’s term rider may continue in force for the covered children, and premiums for the rider could be waived. This continuation usually lasts until the original expiration age for each child, such as their 25th birthday. The exact conditions and continuation period for the children’s term rider under these circumstances depend on the specific terms outlined in the policy contract.