Dependent Life Insurance
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Way.com: Find the Best Life Insurance Company
No Medical Exams
100% Online
Get estimates in seconds
4.9/5 Rating on the App Store
Key Takeaways
Life insurance is a financial product that pays beneficiaries upon the policyholder's demise. As an adult, life insurance is a necessity in your financial plan. Any life insurance will pay the death benefits to the designated beneficiaries, so what makes dependent life insurance different from regular insurance plans? What is dependent life insurance, and why should you consider it when plenty of standard policies cover the lost income and other financial gaps upon the policyholder's death?
In simple terms, dependent life insurance is a kind of life insurance that pays the death benefit to the policyholder when the dependent designated in the policy passes away. The dependent can be a spouse, children, or domestic partner. Therefore, the benefits are received by the policyholder when the designated dependents predecease the policyholder.
This type of insurance is also called voluntary dependent life insurance or voluntary group life insurance. The death benefits received through this policy can aid with the funeral and burial costs and other expenses.
Most of the time, dependent life insurance can be obtained through an employer's group benefits plan option.
The coverage for a dependent life insurance policy is based on the rules in the plan, which varies with each insurance company and the employer which initiates the plan. In most cases, dependent life insurance policies restrict coverage to the costs associated with the insured person's funeral and burial. Therefore, the coverage ranges between $4000 and $8000 or $10,000.
Every dependent life insurance plan will outline a maximum coverage per qualified dependent, with spouses typically having higher limits than children. While the children are covered at the same rate, the rate for spouses is relatively higher, considering the age and the chances for them to pass away, compared to children.
However, the group coverage you acquired for yourself may also limit your dependent coverage possibilities. Their maximum coverage tends to be limited to 50% to 100% of your additional coverage.
In addition, dependent life insurance cannot be duplicated with another policy under the same group life insurance plan. If you and your husband work for the same firm and he has group life insurance, he cannot get dependent life insurance. However, one of you may buy it for your children.
A person must first meet the requirements of your group life insurance plan's criteria of a dependent to be covered as a dependent. As long as your spouse and children satisfy standards, most policies let you add dependent life insurance. For instance, many supplemental life insurance plans, like health insurance, only count children as dependents up to 26.
The dependents that are included in the policy are usually spouses and children. However, there can be other dependents as well, but it will depend on the policy regulations.
A dependent life insurance policy can cover your biological children, stepchildren legally adopted children, or any child you have legal care for. Usually, insurers only cover a child until they hit a certain age.
However, even if they are older, they may still be counted as dependent for life insurance if they are mentally or physically disabled or a full-time student. Proof of their disability, like a note from their doctor from the school, will support your claim to extend the age of the dependent. The status must be the same even while filing taxes.
If the child is married, they usually won't count as a dependent.
The term "spouse," in this case, refers to anyone legally recognized as either your husband or wife by the state's laws. It is also possible to include a partner in a common-law spouse, provided that the marriage is legally recognized in the relevant jurisdiction. It's possible that a domestic partner won't be deemed a spouse; in that case, they won't qualify for dependent life insurance unless your policy also covers additional adult dependents.
Though not very common, additional dependents like a domestic partner or elderly parent may be qualified for dependent life insurance. However, it will depend on your policy terms, and the dependents must reside with you, be financially dependent or interdependent, and not be married.
Family Servicemembers' Group Life Insurance (FSGLI) is a life insurance program specifically created for the spouses and dependent children of military members who are covered under the Servicemembers' Group Life Insurance (SGLI) policy. To be eligible for FSGLI, the military member must have an active full-time SGLI policy.
Dependents who qualify for coverage include the military member's spouse and children under 18 years old, full-time students, or partially or fully disabled. The maximum coverage limit for dependent children is $10,000, meaning that the FSGLI policy would pay out up to $10,000 in the event of a child's death. The maximum coverage limit for the military member's spouse is much higher, allowing coverage of up to $100,000.
| Pros | Cons |
|---|---|
| A full medical examination is not required for the coverage. | Due to limited coverage, additional policy coverage is required. |
| Funeral and burial costs are covered. | Leaving the job can make you lose coverage. |
| Easy to make payments. | Rates can be higher when compared to individual policies. |
If you pay all the premiums or your company pays part of the cost of a policy worth $2,000 or less, dependent life insurance is not taxed. But it is taxed if your company pays over $2,000 worth of coverage for a dependent.
Depending on the plan's rules, dependent insurance can cover your spouse, children, and others who depend on you. If a covered dependent dies, you would get the face value of the dependent life insurance policy as the death benefit since the employee becomes the beneficiary.
Yes, your life insurance policy. A dependent life insurance policy could also add children as dependents include your birth, step, legally adopted, or legal guardian children. Insurers usually cover children until they turn 26, as in medical insurance or another age, such as 20. If they're mentally or physically impaired or full-time students, children over the age restriction can still be life insurance dependents. If they're married, the child won't qualify as a dependent unless you can prove their handicap with a doctor's note.
Yes, you’ll have to undergo a medical underwriting process once you are signing up for dependent life insurance.
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