What Is a Child Term Rider on Life Insurance?

Life insurance policies can be customized with various optional additions known as riders. These riders allow policyholders to enhance their base coverage, tailoring it to address specific needs or circumstances that extend beyond the primary policy’s scope. By selecting appropriate riders, individuals can modify their insurance protection, ensuring it aligns more closely with their evolving financial planning objectives.

Defining the Child Term Rider

A child term rider is an optional add-on to an adult’s life insurance policy that provides term life insurance coverage for a child. It functions as a supplementary provision rather than a standalone policy. This rider extends coverage for a defined period, typically until the child reaches a predetermined age, such as 18, 21, or 25, then expires. The primary purpose of a child term rider is to offer financial support to the parent in the unforeseen event of a child’s passing, helping to cover expenses like funeral costs.

Core Components of the Rider

Child term riders offer coverage amounts from $5,000 to $25,000, though some insurers may provide options up to $100,000. Eligibility for initial coverage begins when a child is at least 14 or 15 days old and extends up to a maximum age for enrollment, often around 18 or 21 years old. The premium for this rider is a single, low, and level amount, covering all eligible children in the household, including any future biological or adopted children, without an increase in cost. The coverage commonly expires when the child reaches an age between 23 and 25, or when the primary policyholder reaches a certain age like 65.

The Convertibility Option

Many child term riders include a convertibility option, which allows the covered child to transition their term coverage into a permanent individual life insurance policy. This conversion can typically occur when the child reaches a specified age, often between 18 and 25, or upon the rider’s expiration. A significant advantage of this option is that it usually does not require the child to undergo a medical examination or provide evidence of insurability at the time of conversion. When converted, the child becomes the new policyholder, and the premium for the new permanent policy is determined based on their age at the time of conversion. This provides guaranteed insurability, ensuring the child can secure life insurance protection regardless of health changes since the rider’s inception.