South Carolina Insurance Practice Exam

What is the primary advantage of adding a children's term rider to a life insurance policy?

1. Can be converted to permanent coverage without evidence of insurability

2. Provides funds for child education upon death

3. Offers a lower premium for the primary insured

4. Increases cash value of the policy

The correct answer is: Can be converted to permanent coverage without evidence of insurability

The primary advantage of adding a children's term rider to a life insurance policy is that it can be converted to permanent coverage without the need for evidence of insurability. This feature is particularly significant as it allows parents to ensure that their children have access to insurance coverage in the future, regardless of any health issues that may arise as they grow older. If a child develops a medical condition after the rider is added, they can still secure permanent life insurance without undergoing medical underwriting, which might otherwise result in higher premiums or denial of coverage. This option enhances the flexibility and security of the policy for families planning for their children's financial future. It is a proactive measure to ensure that the youth can obtain life insurance on favorable terms later, which can be a crucial financial protection tool as they embark on their adult lives.