South Carolina Life Insurance Practice Exam

Children's riders attached to whole life policies are usually issued as what type of insurance?

1. Universal Life

2. Whole Life

3. Term Insurance

4. Endowment Insurance

The correct answer is: Term Insurance

Children's riders attached to whole life policies are typically issued as term insurance. This is because a children's rider provides coverage for a limited period, specifically for the life of the child, until they reach a certain age or sometimes until the parent's policy is in force. The rider allows for a low-cost way to insure the lives of children. Term insurance is characterized by its temporary nature, which aligns with the purpose of children's riders. These riders provide a death benefit in the unfortunate event that the child passes away while the rider is in force, typically at a very low premium compared to standard whole life policies. Once the coverage period ends or the child reaches a certain age, the rider can generally be converted to a permanent policy if the child chooses to do so. In contrast, other types of insurance like universal life, whole life, or endowment insurance provide more complex and permanent coverage solutions that do not align with the primary purpose of a children's rider, which is to provide temporary and affordable coverage.