What is Dependent Life Coverage and When Does It Start?

Jun 09, 2014

Life insurance comes in many forms and can serve many purposes from simple protection to complex estate planning. Many employer sponsored benefits plans include insurance coverage for the employees’ dependents, namely for their spouse and children. This coverage is not to be confused with voluntary life insurance that can purchased on a spouse.

Dependent life coverage for spousal dependent life is in the area of $10,000 or $5,000 and $5,000 or $2,000 for each dependent child. These are modest amounts as this coverage is meant to help employees meet the funeral and burial expenses associated with a dependent’s death. To be insured for this coverage, it is almost always limited to employees, who are covered under the group contract and they are usually the beneficiary.

Who qualifies as a dependent? The employee’s spouse must not be not legally separated from the employee and the employee’s unmarried dependent children, which includes stepchildren and adopted children. It is important to note that the start of coverage for dependent children varies from provider to provider. While most policies begin coverage from live birth, there is one provider that starts coverage as early as 20 weeks gestational age. There are a couple of providers that even cover stillbirths. On the other hand, some providers do not instate coverage until the child is 14 days old or even 15 days old. Dependent children coverage ceases commonly at age 19 or 21 and 25 if attending a post- secondary institution on a full-time basis.

There are a few policies that do allow an employee to elect coverage for the spouse only or for children only. However, in most cases, if dependent coverage is selected, all dependents that meet the definition are insured. When dependent coverage is in effect for an employee, any new eligible dependents are automatically insured. A single premium applies to the dependent life benefit, regardless of the number of dependents.

As you can see, not all policies are created the same and the nuances may appear subtle, but at the time of loss, the details prove to be important.

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