3 Ways a Child Life Insurance Rider Can Make Your Child's Life Easier

A child term rider provides protection today and into the future.

Years ago, when my children were young, my inlaws purchased life insurance policies for each of them. Honestly, I was a little creeped out by it and wondered how they could even imagine anything happening to my boys. The fact they were older and wiser eventually became apparent. But more on that in a moment.

What is a child term rider?

When you purchase term life insurance for yourself, you will typically have the opportunity to add riders. A rider of any sort adds benefits to your existing life insurance policy, providing extra coverage. In the case of a child term rider, it provides coverage in the event a child passes away.

The additional coverage you purchase is referred to as "units," with each unit equalling $1,000 in coverage. So, if you were to buy 10 units, you'd have a rider with $10,000 of coverage. Typically, a child term rider must be purchased before a child reaches the age of 17. How long the rider remains active depends on the insurance company, as each has its own limits, but must end by the time the child hits their mid-20s.

While there is nothing worse than the idea of losing a child, there are several ways a child life insurance rider can benefit your children.

1. Coverage into early adulthood

Let's say a child rider stays in effect until a child's 25th birthday. At that point, the child is likely just finding their adult feet, finishing college, or beginning to build a career. That's the time in life when a person is least likely to have enough money to purchase a separate policy. If the rider on your policy keeps them covered until a time when they can afford a new policy, that's a pure benefit.

2. Convertibility

Here's where the wisdom of my inlaws comes in. I didn't know back in the day the policies they purchased for our boys were convertible, meaning they could be converted into a permanent policy when the original policy was set to expire. Both of our kids were in college well into their 20s. While they were both healthy, that's not true for everyone.

Converting a child rider into a permanent policy requires little or no underwriting, meaning they don't have to go through a medical exam to qualify. What if one of the kids developed a serious condition that made it more challenging to land life insurance? Because of the policy their grandparents purchased, they didn't have to worry about that.

3. Already in the insurance habit

According to Savings Bank Life Insurance (SBLI), most people don't start thinking about life insurance until they hit their 30s. By then, they're getting married, having kids of their own, building a business, and carrying a mortgage.

By starting your child out with life insurance, it's always a part of their life. There's a better chance they won't go a decade or more without coverage because it's so readily available to them. Of course, there's no guarantee your child will convert their childhood coverage, but it's more likely to happen given how simple the process is.

Cost of a child life rider

The average annual cost for a $10,000 child life rider is around $50. That's a little over $4 per month. Better yet, one rider covers all children in your family. Coverage for six children costs the same as coverage for one. That means when any of them "age out," they each have the same opportunity to convert to an adult policy without having a medical exam.

Questions to ask

Each insurance company is different, so before you add a child rider, make sure to ask the following:

• At what age does coverage expire?
• Can a child lose eligibility at any point (for example, if they marry young)?
• What are my coverage options (what's the maximum amount I can buy)?
• If my child decides to convert coverage, what's the highest amount they can convert to?

If adding a child rider fits in your family budget, it's an excellent way to provide coverage for your kids until they're financially able to purchase their own.