How child life rider creates a financial start

BY ANDREW STEWART

Did you decide to send your children back to school? Like so many other parents this was a decision my family struggled with and had lengthy conversations about. My daughter is eight years old and our family explored the pros vs cons of online learning. We took into account how best she learns, what is our greatest fear of her attending school and being exposed to COVID-19. Making decisions as a blended family is not always easy, but we came together and collectively agreed to send her back to school.

Our decision came with ample nervousness and anxiety-like so many other parents. Preparing for the new normal of wearing masks all the time, hand washing more frequently, and being socially distanced in class added another level of stress to the school year. What I am most proud of, is we involved her in the conversation and listened to her fears. We made sure to talk in a positive tone vs fearful. We incorporated the normal back to school jitters and how she handled those feelings last year. We focused on the day-to-day routines of being back at school and then put them into practice.

In anticipation of the new school year, we balanced our anxiety by being prepared. Purchasing insurance works very similarly. I try to advise my clients that you not only plan for today but also for the future. Your children are a gigantic part of any future decisions. A primary way to assist children for financial success is to eradicate or lower the cost they will pay for life insurance in the future. An easy and effective way to accomplish this is to add a children’s life rider to your life insurance policy. This benefit provides life insurance protection for children of the life insured who are named in the application and are alive when the benefit comes into force. Any future additions to the family are automatically covered when the child is 15 days old. The good news is that the cost of this benefit is not dependent on the number of children covered. So, if you’re like the McCaughey family with septuplets it’s no problem.

If you’re between 16-60 years you can add this rider and it will cover children as young as 15 days to 17 years old for each child. An insured child is defined as any child, stepchild, or legally adopted child. Now if the unthinkable were to happen the coverage amount purchased will be paid to the beneficiary after the child is 15 days old and before the child’s 25th birthday. The beneficiary will be the life insured (normally the parent) if they are living.

Ok so let us discuss the crown jewel of why every parent should have this child life rider on their life insurance policy if they haven’t purchased a separate policy for their child. It’s all about the conversion option. The coverage amount purchased may be converted to any whole life or term insurance policy once the child turns 21 and before they turn 25. The element that they can purchase additional amounts up to four and in some cases five times the original amount purchased without having to provide any evidence of insurability or medical is astounding. For example, if you had a $25,000 child life rider, your child could increase their coverage to $100,000 or $125,000. The premium for their new policy will be based on the current rate for the attained age.

A common question is what happens to the rider if life insured passes away before the end of the coverage period or before a conversion could happen. The child life rider will remain in force until the expiry date of the rider with no further premiums required for the rider.

For more information about this rider, please refer to your policy documents or speak to a licensed advisor.