How Does a Child Life Insurance Rider Work?

Life insurance riders allow you to increase the coverage or death benefit provided by your policy. One popular option for parents is a child rider. This addition pays out a death benefit if a covered child passes away while the policy is active. Like other insurance riders, there are both pros and cons to consider that will help you determine whether this coverage is right for your family.

For help deciding if a child life insurance rider is right for you, you could consider working with a financial advisor.

What Is a Child Rider for Life Insurance?

Child riders, also referred to as child insurance riders or child term riders, allow you to enhance a term life insurance policy covering you or your spouse.

This type of rider allows you to enhance a term life insurance policy by including coverage for all of your children, including those you may have in the future. If your child passes away, your policy’s child rider allows you to collect a death benefit. You could then use this money to cover funeral and burial costs or other expenses.

Depending on your policy’s structure, a child rider may be convertible to permanent life insurance coverage.

How Child Rider Life Insurance Works

Typically, the option to purchase a child rider is offered when you buy a new life insurance policy. Some insurance companies may allow you to add a child rider to an existing policy, though this isn’t always the case.

Most child riders cover children from infancy up to age 18 or your 65th birthday, whichever comes first. However, some policies may extend coverage until the child’s 25^th birthday.

There is an additional premium for a rider covering all of your children. The cost varies based on your insurer, but it typically runs $5 to $7 per $1,000 of coverage, depending on the size of the death benefit.

The insurance company may require you to be within a certain age range to qualify for a child rider. For example, you may need to be at least 20 years old but younger than 55 to qualify. You may need to answer a health questionnaire about your children, though a medical exam usually isn’t necessary. Keep in mind that pre-existing conditions may not be covered.

If your child passes away within the covered age window, your rider would allow you to receive a death benefit. The death benefit amount is determined by the terms of the rider, but they generally range from $10,000 to $25,000. Proceeds are paid out in a lump sum and are generally tax free.

In the event that you never need to use the death benefit, your child may have the option to convert a term rider into permanent life insurance for themselves. The policy would then remain active as long as the premiums are paid.

Who Needs a Child Rider for Life Insurance?

A child rider for your life insurance policy can help enhance your coverage in the face of a worst-case scenario. The loss of a child can be emotionally devastating, and a child rider can ease some of the financial burden of paying for funeral or burial arrangements.

Child riders cover your children based on their health status at the time of purchase. That means if they later develop a life-threatening condition, this coverage will already be in place. A child rider can also be beneficial if you want your child to have the option of later converting it to a permanent life insurance coverage.

Convertibility can be an attractive feature of child riders because they ensure that you get some value out of the coverage. Ideally, you never have to use the rider’s death benefit. Then, your child can convert the policy later so the premiums you’ve paid don’t go to waste.

Child Term Rider vs. Child Term Life Insurance vs. Child Whole Life Insurance

A child term rider is one way to buy life insurance for your children. However, you can also choose a standalone term life or whole life insurance policy for kids.

Child Term Life Insurance

Term life insurance covers your child for a set time period. You pay a premium, and you receive a death benefit if something happens to your child.

For example, you may choose $10,000, $20,000 or $30,000 as a death benefit. If you never need to use the coverage, the policy would expire once the term ends.

Child Whole Life Insurance

Whole life insurance policies for kids also offer a death benefit for a covered child. This benefit can range from $5,000 up to $50,000, depending on the policy. This is permanent life insurance that covers your child for as long as premiums are paid. The younger your child is when you get coverage, the lower the premium tends to be.

One of the main selling points of whole life insurance for kids is the cash value component. Child whole life coverage can accumulate cash value over time as you pay in the premiums. Your child can then borrow against that cash value later or withdraw it from the policy. They may also continue paying the premiums as adults, allowing the cash value to continue to grow. However, term life policies don’t accumulate cash value.

Term and whole life insurance may work you have just one child to cover. Whole life could be attractive if you’re interested in giving your child lifelong coverage with the potential to grow cash value. A child term rider, on the other hand, can offer blanket coverage for multiple kids. There’s no cash value but it may be a cheaper option compared to buying one or more standalone policies.

How Much Coverage Do You Actually Need for a Child Rider?

Most child life insurance riders are designed to provide a modest death benefit rather than long-term income replacement.

Coverage amounts commonly range from $5,000 to $25,000, depending on the insurer and policy terms. These limits reflect the primary purpose of a child rider, which is to help cover immediate expenses rather than build a large financial payout.

One of the main uses for a child rider death benefit is paying for funeral, burial or memorial costs. These expenses can easily reach several thousand dollars, even for simple services. A rider can also be used to cover related medical bills, counseling services or other short-term costs that may arise after a child’s death.

Family circumstances can influence how much coverage makes sense. Households with limited emergency savings may prefer a higher rider amount to reduce reliance on other funds. Families with larger cash reserves may view a smaller rider as sufficient since they already have resources available for unexpected expenses.

It can also help to compare the cost of different coverage amounts. Premiums for child riders generally increase as the death benefit rises, though the difference is often small. Take the time to review how much more you must pay for higher coverage so you can determine whether the extra benefit aligns with your budget.

Because child riders are not intended to replace income, selecting coverage based on final expenses and short-term needs is usually more appropriate than aiming for large benefit amounts.

Research typical costs for both your area and your household’s financial capacity so you have a practical reference point later when choosing a rider amount.

Bottom Line

A child rider for life insurance can make sense in certain situations, but it’s important to understand what you receive in return for your money. Researching the death benefit amount, coverage limitations or restrictions, premiums and future convertibility can help you to decide if a child term rider is right for you.

Insurance Planning Tips

Consider talking to your financial advisor about the pros and cons of choosing a child rider for life insurance and whether or not this might be something you need. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re buying life insurance for the first time, it’s important to understand how much coverage you might need and what type of policy could work best. Term life and permanent life insurance can offer a similar range of death benefit amounts, though term life tends to be cheaper where premiums are concerned. The younger you are and the healthier you are when buying either type of life insurance, the less you’re likely to pay. Permanent life insurance can also offer the opportunity to accumulate cash value over time.
In addition to child riders, you may also consider other types of riders such as an accelerated death benefit or guaranteed return of premium rider. While some life insurance riders may be added on for free, others do require you to pay an added premium. Getting online quotes for life insurance can help you estimate your costs.