One thing I have noticed writing life insurance policies for parents are the lack of child rider life insurance policies. Most people give me a funny look when I bring it up. Child rider life insurance is by far the most affordable way to insure your children, especially if you have two or more children. I know some people feel it is too morbid to think about such things, but reality is children do die and a sudden death coupled with an expensive funeral can devastate a young family.
A child rider life insurance policy is a rider on some term life insurance and most whole life and universal life insurance policies. It is an affordable adds on to a parent’s life insurance policy that for one low premium will cover all of the children in the family for the same price. You can purchase as high as $50,000. The most common face amount is $10,000 regardless of the parent’s face amount. The cost for unlimited children to be added is around $4.30 to $6.00 per month depending on the company. Whether it is for one child or eight children or even more the cost is the same. For example, by breaking down the $5.00 premium to a family with four children it equates to $10,000 per child for $1.25 each. There are a lot of life insurance companies that sell $10,000 whole life plans for ten times that amount on children. They also tout whole life for college savings which in eighteen years will be very little towards rising college tuition.
Another great feature of the child rider life insurance policy is that most life insurance companies that offer this rider will guarantee each child the option of converting the policy to up to five times that face amount without proof of insurability. Some companies allow even larger amounts. This not only protects the parents in case of an untimely death of their child but also protects the child’s insurability in the future. For example, the parents decide to purchase a child rider with a $10,000 face amount shortly after the child’s birth. At age 17, the child develops Hodgkin’s disease and is now uninsurable for life insurance. The child now has the option at age 18 to convert the $10,000 rider to a permanent $50,000 in life insurance coverage without proof of insurability or underwriting.
If you have not had your life insurance policy reviewed in the last two years, we highly recommend you contact your life insurance agent. This is especially true for young families having children. The child rider life insurance policy is an affordable but necessary piece of a sound financial plan.
“The greatest gifts you can give your children are the roots of responsibility and the wings of independence.”—Denis Waitley
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Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 27 years of experience in sales and marketing in the insurance and beverage industries.
Tim, I agree that life insurance is required for children. If you do not mind my asking, what do you tell parents to convince them of this?
Meryl, this is never an easy conversation as we were never built to bury a child. Here in Nashville there has been several child drownings this summer. The news reports it and asks for donations for funeral expenses. The last thing a parent needs is the expense of $10,000 to $15,000 for final expenses while grieving the loss of a child. It is just too affordable not to purchase just in case. To answer your question, a story. Hope that helps!
Yep. I also have stories that I use. Most are not based on the loss of the child but rather them getting ill and not being eligible for insurance later on. We have had a few drownings and shootings this summer. I can add something along those lines to my repertoire. Appreciate your input.
You’re welcome! Much continued success to you my friend!
I don’t let a policy go by without adding the child rider to a life policy. Its the most important part of the life insurance. Giving a child an opportunity to be covered and to give them guaranteed insurability is a wonderful thing.
Kristina, that is a great practice to adopt. Much continued success and thank you for sharing.
I’m with you Tim, it breaks my heart to see families having to stand on street corners or passing a bucket in a parking lot to cover funeral expenses. This is just to affordable an option to pass on. I always include it when writing policies for my clients.
Thank you Shelly, I couldn’t agree more. Thank you for sharing.
Universal life or an Annuity , I’m a Bankers Agent and work with both
This is especially true if you have children with a chronic illness that might otherwise not be able to qualify for life insurance.
Thanks for the quality post…
Too often we hear the “I’ll get around to it” excuse for adding a childs life policy. Too often I see “fund raisers” for a child that could have (and SHOULD have) been avoided with some type of juvenile life policy/rider. Usually, the cost for this rider is an easier to bear than needing it and not having it.
Very well stated John, thank you for sharing.
@Tim What about if the client just decides to purchase a individual fully paid premium IUL policy for the child? IUL Details: Very flexible, DB, Cash Value- Fixed 4% Point-to-Point with Cap, Point-to-Point Uncapped at 14%, ACL Benefit Rider (FREE), Living Benefits, Take out a loan using the cash value to help pay educational expenses, etc.
Kenneth, I can sum that up with one word… SOLD! All day long, but my point to writing the article was so many parents refuse to talk about buying life insurance on their child. Using the child rider is affordable and a little less painful than talking about and writing a whole life or IUL. That is a great point and I appreciate you sharing it.
I understand what you was saying completely Tim. It makes great sense! Many families don’t understand the importance of insuring a child and sometimes a spouse. But riders make a great supplement for the parents for not too much more premium.
Kenneth, the families I work with don’t understand why a child needs insurance. As a former Kindergarten teacher, I always talk about the “living benefits” of life insurance. If they don’t want to take the leap to investing into a children’s policy, I always 100% of the time suggest a rider. I do believe education is key when working with families. I am a cheerleader for children’s insurance. I truly believe it’s wonderful benefit.
What a great practice Kimberly, thank you for sharing.
It’s great to be reminded about this very important tool. Thank you!
A child rider is an extra policy attached to a main policy. It generally covers children ages 15 days to about age 25. Usually one price covers all children. Example: $10/mo may buy $20,000 of coverage on 8 children. A very important benefit is the convertibility of the riders. A insured may be able to convert up to 6 times the face with no evidence of insurability at age 25. This has proven extremely valuable to clients. I have converted young cancer survivors, type 1 diabetics and a young client in a coma. All at standard rates.
During my initial fact find I normally ask if they have children and get a bit of info about them. Even if it is in just casual conversation. A child rider is a natural consideration when we are talking family protection. Even if we are doing individual child policies I show the benefits of child riders.
Lee, all great points, I will point out several carriers will insure the child at birth without the 15 day waiting period and no limit on the number of children covered under the rider. For large families, this is a very valuable and affordable way to insure all of their children. Thank you for sharing.
Tim do you have any push back once you explain in more detail the child rider?
Troy, I really don’t. I believe if you explain the risk and the benefits especially for the price, there should be no objections.