Most life insurance policies are designed to provide for your loved ones if you pass away. However, did you know there’s a type of life insurance where the policyholder receives a death benefit if their dependent passes away?This is called dependent life insurance, and is typically offered as a supplemental option to your existing life insurance policy. This policy type will distribute a death benefit if your dependent—typically your spouse, domestic partner or child—passes away. In this article, we’ll discuss the details of dependent life insurance and how it works so you can decide if this type of coverage is the right fit for you and your loved ones.
How can I get dependent life insurance?
Dependent coverage typically takes two primary forms: as a form of juvenile whole life insurance or by adding a child rider to your existing life insurance policy.
Juvenile Whole Life Insurance: Juvenile whole life insurance is a permanent life insurance policy that is purchased for your child. This kind of policy is primarily intended to pay for final expenses in the tragic event of the death of a child. It can also be used to grow and accrue a cash value for a child to access in adulthood.
Child Rider: A child rider is an add-on to an existing life insurance policy that would pay out a death benefit if the unexpected were to happen to your child. Child riders are also a way to protect a child’s insurability, as they can often be transferred into a whole life insurance policy at a later date.
What are the benefits of purchasing dependent life insurance?
The greatest benefit of purchasing dependent life insurance is the same as buying any other life insurance policy: peace of mind. No matter how old or young, expected or unexpected, the loss of a loved one can be devastating, and the last thing you want to worry about is the cost of final expenses. If you’re looking to add a child rider or buy whole life insurance for a dependent, some of the benefits to consider include:
Covering funeral expenses and medical bills
Growing a cash value for the child to obtain at a later date
Converting to greater life insurance coverage at later date without a medical exam
Is dependent life insurance taxable?
Dependent life insurance is not usually considered taxable if you pay for the entirety of the coverage. However, this may change if you get this type of coverage through your employer. If you get the policy through your employer and they pay for over $2,000 of life insurance for any single dependent, the entire cost of the policy is typically considered a taxable benefit.
SelectQuote Can Help You Navigate Your Dependent Life Insurance Options
We can help if you’re considering adding dependent life insurance to your existing policy. At SelectQuote, we can answer any questions you have about your current policy or supplemental options like dependent life insurance. We quickly search highly rated carriers in just minutes, comparing plans on your behalf to find the right fit for your needs and budget.
