What is a child term rider and why is it valuable?

Life insurance on its own is a great way to secure your financial future, but you can make it even more valuable by adding certain riders (a.k.a. additional coverage options) that help you and your family get the most out of your coverage. One option is to add a life insurance “child term rider”. If available to you, a child term rider can be a great way to start financially preparing your children for their own futures. Let’s dive into what this rider does and why it can be valuable.



What is a child term rider?
A child term rider is life insurance that you purchase in addition to your primary life insurance coverage. It provides term life insurance for your existing and future children.

What is term life insurance, you may ask? Term life insurance is essentially “renting” your coverage for a specific period of time. In this case, a child term rider provides life insurance coverage to your children until they reach a certain age, which is typically until they are in their mid-20’s, depending on your policy. Once they reach the designated age they can often convert that protection to permanent coverage to last them a lifetime.

Child term riders typically also apply to adopted and stepchildren. In most cases, the rider can be purchased after the child is over 2 weeks old.¹

Why buy a child term rider?
Nobody ever expects to lose a child, but unfortunately, it does happen, perhaps from an illness, disease or an accident.

Plus, with the rise in student loan debt, should your child take out student loans and pass away before they are paid off, a child term rider can be a big financial help for parents who could be saddled with the unpaid debt.¹

Why is it valuable?
1. All my children
If you remember the show “All My Children”, then you might be at a stage in your life where a child term rider could be useful. One big value add is that the rider covers ALL your children (and future children) for one price. So, particularly for those who have multiple children, a child term rider holds a lot of value. Plus, term life insurance is very affordable, making it the most cost-effective way to insure your family.

2. Easy conversion to a permanent policy
As mentioned earlier, when the rider period ends (around the child’s mid-20’s), they then have the opportunity to convert to a permanent life insurance policy. Despite the common myth that young people don’t need life insurance, having this option at such a young age is a great way to jump start a young adult’s financial stability.

The conversion from a child term rider to a permanent policy is a convenient way to access maximum coverage. It lets them curtail the underwriting process and, with some carriers, can allow for conversion to a much higher value policy.

Most adults understand and value the protection life insurance offers their family should they themselves pass away. However, it is also wise to protect your finances in the event of the worst-case scenario by purchasing a child term rider. At the very least, it makes it easy to set your children up for future financial success, helping them convert to permanent coverage later so you can all have peace of mind for generations to come.

¹Life Insurance Post. Life Insurance with a Children’s Term Rider. 2020.