Group dependent life insurance covers the dependents of an insured employee. Employer’s offering this coverage recognize that employees with dependents have a greater need for insurance than those without dependents.
This benefit is added to a group plan for a small cost and is meant to assist the plan member with funeral and related expenses on a dependent’s death.
Beneficiary:
Generally, the plan member is the beneficiary as the benefit is meant to assist an employee with funeral related expenses on a dependent’s death.
Benefit Structure:
The benefit amount for dependent life insurance is generally a modest flat dollar amount. The benefit for children is typically half of the amount for a spouse.
Some examples are:
- $20,000 for the spouse and $10,000 for dependent children
- $10,000 for the spouse and $5,000 for dependent children
- $5,000 for the spouse and $2,500 for dependent children
Eligible Dependents:
A dependent is typically defined as a plan member’s spouse (married or common law) of the same or opposite sex who has been living with the plan member for a minimum of 12 consecutive months. Unmarried children (including adopted children and stepchildren) of the plan member and/or spouse are eligible between a specified age range (typically 14 days to 21 years of age). Children may be covered up to age 25, if in full-time attendance at a school or university. Dependent children must be dependent solely on the plan member for financial support.
Coverage typically begins for children 14 days after birth and continues until age 21 or age 25 if in full-time attendance at school or university.
Some plans will provide coverage from birth and will commonly charge a higher premium in this case.
If insured children become mentally or physically incapacitated, they may continue to be covered beyond the normal age limits, provided they continue to be dependent solely on the plan member for financial support.
Premium Rates:
Premium rates for dependent life insurance are low and a single flat rate is typically used.