As a life insurance sales consultant, I often help advisors and agents develop solutions for clients with unique needs. One area where I’ve been able to help my clients is consulting on cases for parents who have children with disabilities. Often, the clients are the primary caretakers for their children with disabilities, and they worry about providing for their child should anything happen to them. To address this concern, the parents often insure themselves, so their child’s care will continue. These parents also face the more complicated issue of whether or not they should purchase a life insurance policy on their child’s behalf.
As a financial professional, this challenge can be difficult. Advisors and agents want to be able to address all the needs of a family, and it can be frustrating when they’re unable to find solutions for a child due to their unique circumstances. Since some disabilities are not covered by insurance, agents and advisors are limited in the options they can present to a family. Disabilities that aren't covered range from premature birth to heart conditions to autism. Many agents struggle to create a feasible solution for their clients. Fortunately, there's an excellent alternative to typical whole life coverage for a child when they likely wouldn’t withstand standard underwriting.
At DMI, we work with an A-rated carrier that allows us to add a Child Rider on their term policies without underwriting. Yes, you read that correctly: the Child Rider is not underwritten. So, if the parents qualify for the term insurance, they can add a child rider and potentially cover these children for a lifetime, ensuring their insurability.
For example, if both parents take out an individual term policy, we can add a child rider on each policy that will cover all their children, both now and in the future, for up to $25,000 of coverage. On the policy anniversary, after the child turns 25, the rider can convert to three times the face of the rider of permanent coverage. So, Mom and Dad each buy an additional $1 million of the 30-year term life, with $25,000 child riders. When the child turns 25 he or she can convert each of the riders to $75,000 of permanent coverage for a total of $150k in coverage, with no underwriting.
While every situation is unique and can include its own challenges, I’ve found this alternative to be very successful for my agents. If you have any clients that you think might benefit from considering this option, please give me a call or send me an email to discuss.