Riders Covering Additional Insureds

Which statement about children's term riders in life insurance is NOT correct? Coverage under the rider for other covered children stays in force when one covered child reaches the rider's age limit. The coverage for any covered child normally ends when he or she reaches a certain age. The insurer must write separate riders for each child in a family. 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.

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 for a specified amount or for a specified percentage of 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

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.

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.

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.`

Which statement about spouse/other insured term riders on a life insurance policy is NOT correct? The intent of this coverage is temporary. 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. 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 once the children have grown and moved out on their own.

All the following statements regarding life insurance policy riders that cover additional insureds are correct EXCEPT: Term insurance is used to provide the additional insured coverage. The policy owner must have an insurable interest on the insured who is covered under the additional insured rider. Each additional insured is issued his or her own separate policy. The additional insured rider covers individuals other than the base policy's insured.

Each additional insured is issued his or her own separate policy.