Maryland Life and Health Insurance License Practice Exam

What occurs with the coverage under a children's term rider when the child reaches a specified age?

1. Coverage is automatically renewed

2. Coverage is eliminated

3. Coverage transitions to permanent insurance

4. Coverage is extended indefinitely

The correct answer is: Coverage is eliminated

When a child reaches the specified age outlined in a children's term rider, the coverage typically terminates. This rider is designed to provide life insurance coverage for children, usually until they reach a certain age—often 18 or 21, depending on the policy. Once the child reaches this age, the rider's coverage no longer applies, effectively eliminating the coverage for that child under the rider. The reason this is a common approach is that children's term riders are often meant to provide temporary protection during the child's young years, typically when the financial exposure to the parents is highest. After the specified age, the assumption is that the young adult (the former child insured) may be responsible for securing their own insurance needs or may not need the coverage provided under the rider anymore. The options associated with automatic renewal or transition to permanent insurance do not align with the typical structure of children's term riders, where coverage is specifically designed to end at a predetermined point. Similarly, extending coverage indefinitely does not reflect the nature of this rider, which is inherently temporary and age-restricted.