Riders Covering Additional Insureds

Other Insured Term Rider

A person can buy an other insured life rider to cover the life of a spouse (or other adult with an insurable interest). Usually the coverage ends sometime before the other insured's age 100 because the intent of this coverage is temporary. Term life insurance riders on spouses are often bought to provide additional coverage while children are still young and to ensure needed additional funds in the event the other covered spouse dies -other insured life rider=Covers someone other than the base policy insured. These riders typically take the form of term insurance. Many people buy such riders rather than buying permanent policies on each person. Common other insured term riders are children's term rider and family term rider.

Key points

-Additional insured riders generally use term life insurance, regardless of the type of insurance forming the base policy.

Family Term Rider

A family term rider is an alternative to either a separate spousal rider or separate children's rider. This rider covers multiple family members (spouse plus children) equally with term insurance. The policyowner can add or drop insureds on this type of policy at any time. If adding insureds, proof of insurability must be provided. Children covered by this rider can convert their coverage to permanent coverage at age 21 without proof of insurability. Typically, the converted policy's face value can be up to five times the coverage under the family term rider

Term Life Riders

Additional insured riders generally use term life insurance, regardless of the type of insurance forming the base policy.

Riders Covering Additional Insureds

Policy riders can also be used to provide life insurance coverage on more insureds under a single policy, usually at a lower premium than if a second policy were purchased. This is done by adding a term life rider to the permanent life policy. Under these "additional insured" riders, the insured is someone other than the primary insured under the base policy.

quiz

Question 1 All the following statements about family term riders with life insurance are correct, EXCEPT The policyowner can add or drop family members on a family term rider but must prove insurability if adding insureds. A family term rider is an alternative to either a separate spousal rider or separate children's rider. Children covered by this rider can convert their coverage to permanent coverage at age 21 without proof of insurability. *The family term rider covers multiple family members (spouse plus children) with term insurance coverage that varies by age. A family term rider is an alternative to either a separate spousal rider or separate children's rider. Question 2 Insurers often set children's term rider limits on the basis of which of the following? issuing the rider in term insurance in $500 increments issuing the rider for 50 to 75 percent of the coverage amount on the base policy issuing the rider in term insurance in $1000 increments *issuing the rider for a specified amount or for a specified percentage of the base policy A common approach to setting children's term rider limits is to issue the rider for a specified amount (such as $5,000 or $10,000). Question 3 Which statement about spouse/other insured term riders on a life insurance policy is NOT correct? A person can buy a term life insurance rider to cover the life of a spouse (or other adult). Usually the coverage ends sometime before the other insured's age 100. The intent of this coverage is temporary. *A policyowner often buys a term life insurance rider on a spouse to provide additional coverage once the children have grown and moved out on their own. A policyowner often buys a term life insurance rider on a spouse to provide additional coverage while children are young and to ensure needed funds in case the other covered spouse dies. Question 4 Under a family term rider to a life insurance policy, children who are covered under the rider can typically convert their coverage to permanent coverage as early as age 25, without having to provide evidence of insurability. age 21, as long as evidence of insurability is provided. age 25, as long as evidence of insurability is provided. *age 21, without having to provide evidence of insurability. Children covered by the family term rider can convert their coverage to permanent coverage at age 21 without proof of insurability. Question 1 Which of the following statements about children's term riders is CORRECT? The coverage ends when the child enrolls in college or gets a job. *The same premium applies to all of the insured's children, no matter how many are covered. At the time coverage ends for any covered child, the child can apply for any permanent life insurance policy the insurer is then issuing, but the child must be insurable. Premiums are reduced for other covered children when one or more reaches age 21. Under a children's term rider, the same premium applies to all of the insured's children whether a child is covered or 20 are covered. Question 2 Which statement about children's term riders in life insurance is NOT correct? The coverage for any covered child normally ends when he or she reaches a certain age. Depending on the insurer, the age limit for coverage under a children's term rider may be 18, 21, or 25. *The insurer must write separate riders for each child in a family. Coverage under the rider for other covered children stays in force when one covered child reaches the rider's age limit. Many children can be covered under a single children's term rider. Question 3 Which statement about life policy riders that cover additional insureds is NOT correct? These riders typically take the form of term insurance. Policy riders can provide needed coverage on more than one insured at a lower premium. These riders cover someone other than the base policy insured. *Each additional insured is issued his or her own separate policy. Policy riders can provide needed coverage on more than one insured at a lower premium. The policyowner buys an additional insured or other insured rider, which is added to the base policy. Question 4 All the following statements regarding life insurance policy riders that cover additional insureds are correct EXCEPT: *Each additional insured is issued his or her own separate policy. The policy owner must have an insurable interest on the insured who is covered under the additional insured rider. Term insurance is used to provide the additional insured coverage. The additional insured rider covers individuals other than the base policy's insured. Policy riders can provide needed coverage on more than one insured at a lower premium. The policyowner buys an additional insured or other insured rider, which is added to the base policy.

Children's Term Rider

The amount of term life insurance coverage that the children's term insurance rider provides is usually modest. This modest amount reflects the generally smaller death benefit need when a child dies. A common approach to setting children's term rider limits is to issue the rider for a specified amount (such as $5,000 or $10,000). Alternately, a rider can be issued for a specified percentage of the amount of coverage on the primary insured parent's base policy (such as 20 percent). Many children can be covered under a single children's term rider. But, the coverage for any covered child normally ends when he or she reaches a certain age. Depending on the insurer, that age limit may be 18, 21, or 25. Coverage under the rider for other covered children who have not yet reached the limiting age stays in force. When coverage ends for any covered child, the child can convert the coverage to any permanent life insurance policy the insurer is then issuing. Evidence of insurability is not required. The policy amount can be up to some multiple of the term life insurance coverage, such as five times the term amount. For example, a child who has $5,000 of coverage under a children's term insurance rider could convert to a permanent life insurance policy of up to $25,000