Life Insurance Riders: Juvenile Policy Add-Ons Explained

Juvenile life insurance, or child life insurance, is a permanent policy purchased for a minor child (under the age of 18) by a parent, grandparent or guardian. There are several types of life insurance riders, but the one that typically appears on a juvenile life insurance policy is the Payor Benefit Rider. This rider ensures that the child's life insurance coverage continues even if the payor (usually a parent or guardian) dies or becomes disabled. The rider waives future premium payments in such circumstances, keeping the policy in force. Another common rider in juvenile policies is the Child Term Rider, which can be attached to a parent's life insurance policy to provide temporary coverage for the child until they reach a certain age. Juvenile life insurance policies are often purchased as whole life insurance policies, which provide coverage for life as long as premiums are paid, and offer a guaranteed cash value component that the child can access later.

Payor Benefit Rider

A payor benefit rider is an optional add-on to a life insurance policy. It ensures that the policy remains active if the payor—the person paying the premiums—dies or becomes totally disabled and is unable to continue making payments. This type of rider is commonly added to policies taken out on behalf of someone else, such as a parent who buys a life insurance policy for their child.

In the case of juvenile life insurance policies, a payor benefit rider typically appears to ensure that coverage continues if the payor dies or becomes disabled. This is important because, if the adult payor of the policy (usually a parent or guardian) is no longer able to make payments, the policy remains in force without requiring further premium payments. This ensures that the child's life insurance coverage continues uninterrupted.

A payor benefit rider is written as an addendum to a life insurance policy. It is not a basic part of the policy itself but must be added as an extra document to ensure that it applies if certain conditions are met. An insurance company will analyse the health, age, and other conditions of both the payor and the insured when deciding whether to approve a payor benefit rider.

The rider will then be activated if the payor dies or becomes disabled. Once activated, the insurance company will waive all future premiums on the policy, and the policy will remain in place for the remainder of the policyholder's life or the full length of the policy's term.

Child Term Rider

A child term rider is an add-on to a life insurance policy that covers the lives of all your minor, unmarried, dependent children. It can be purchased in addition to your primary life insurance coverage. The rider covers all eligible children under one flat fee, including future children. This means that any children born after the purchase of the rider are also eligible for coverage under the same fee.

The coverage provided by the rider is temporary and usually lasts until the child reaches adulthood, typically between the ages of 18 and 25. However, the rider can be converted into a permanent life insurance policy for the child, without the need for evidence of insurability. This is a valuable feature, as it guarantees the child's future insurability, regardless of their health status or lifestyle habits.

The child term rider provides a death benefit, which is a tax-free lump sum payment that can be used to cover expenses such as funeral costs, income loss, counselling, and memorials. The benefit provided by the rider can help ease financial stress during a time of immense grief and loss.

The cost of a child term rider is generally affordable and based on the lower risk associated with insuring children. The coverage amount varies depending on the insurer, with options ranging from $1,000 to $100,000.

To add a child rider, the policyholder is typically required to be between the ages of 18 and 65, although some companies may have different age restrictions. The child must be between 15 days and 18 years old to qualify for the rider.

Overall, the child term rider is a valuable addition to a life insurance policy, providing financial protection and peace of mind for families in the unfortunate event of a child's death.

Guaranteed Insurability Rider

A guaranteed insurability rider is a type of life insurance rider that is often included in juvenile life insurance policies. This rider is designed to provide additional coverage to the insured child at specific ages or significant life events without requiring them to undergo medical underwriting or provide evidence of insurability. In other words, it allows the policyholder to increase the coverage amount of the policy in the future, regardless of any changes in the child's health or other risk factors.

Juvenile life insurance policies are often purchased to secure coverage for a child's entire life, and the guaranteed insurability rider is added to accommodate the child's evolving needs as they mature. It ensures that the child has the option to increase their coverage as they reach adulthood, without facing potential difficulties in obtaining insurance due to changes in health or lifestyle.

The guaranteed insurability rider gives the policyholder the option to purchase additional insurance at specified intervals up to a maximum age, usually 40, without providing evidence of insurability. It also provides alternative dates to obtain additional insurance, such as the date of marriage, the birth or adoption of a child, or other life events when the need for insurance coverage may increase. This rider guarantees the option to buy more coverage, regardless of the policyholder's health at the time of the request, at premium rates based on their attained age.

By including a guaranteed insurability rider, parents can ensure that their child's future insurability is protected, regardless of any changes in their health or occupation. This rider provides peace of mind and flexibility, knowing that their child's insurance coverage can be adjusted as their needs change over time.

Waiver of Premium

A waiver of premium rider is an optional insurance policy clause that waives premium payments if the policyholder becomes critically ill, seriously injured, or physically impaired. This rider is added to the policy for an additional fee and is only available when the policy is issued. The rider fee is either added to the premium or charged as an upfront fee.

The waiver of premium rider is useful if the policyholder becomes unable to work due to injury or illness. The most commonly considered diseases are those that require significant hospital stays. Some riders stipulate that the condition need only adversely affect the policyholder's occupation.

Most waiver of premium riders contain a waiting period during which the policyholder cannot claim benefits. If the policyholder is physically impaired or injured during the waiting period, they may receive a full refund of the premiums paid. Without a waiting period, the insurance company assumes much more risk of losses.

To qualify for benefits from a waiver of premium rider, applicants cannot have any pre-existing disabilities or conditions. This pre-existing limitation avoids the possibility of writing a policy that would not yield premium payments from high-risk applicants.

The waiver of premium rider can be added to term, whole, and universal life insurance policies. Physical impairment, critical illness, and severe injury are the most common qualifying conditions under the waiver of premium rider. Terms, conditions, and benefits vary by insurance product and issuing company.

The waiver of premium rider is often limited to people aged 18 to 60 with no pre-existing disabilities. Many insurers allow the purchase of the rider when applying for a policy only—it cannot be added on later. To activate the rider, the policyholder must file a claim that includes a statement from their doctor detailing their condition and confirming their inability to work.

The cost of a waiver of premium rider depends on several factors, including the policyholder's age, health, and coverage amount. For example, a 35-year-old man with a 20-year, $500,000 term life insurance policy might pay about $3 a month for the rider.

Accidental Death Benefit

An accidental death benefit rider is an optional add-on to a life insurance policy that provides an additional payout if the insured dies by accident. This is known as "double indemnity", where beneficiaries receive the standard death benefit as well as the additional amount from the accidental death benefit rider.

The cost and eligibility criteria for accidental death benefit riders vary by age, health, lifestyle, and coverage amount. They may increase over time and significantly raise life insurance premiums, so careful evaluation is needed.

Accidental death is defined as an event that strictly occurs as a result of an accident, such as car crashes, slips, choking, drowning, or machinery-related incidents. Deaths from illness, war, or illegal activities are usually excluded, as are hazardous hobbies like race car driving or bungee jumping.

Accidental death and dismemberment (AD&D) insurance is a standalone policy that covers accidental death and severe injuries or dismemberment resulting from accidents. It offers broader coverage than an accidental death benefit rider.

Frequently asked questions