Life Insurance Benefits for Special Needs Children

Parents who have a child with special needs should think about insuring themselves in order to provide their child with the care and the financial stability he or she needs in the case that anything happens to them. Remember that financial planning is complicated enough as it is, but with a disabled or special needs child the financial challenges can increase to a new level. As a parent with a child who has special needs, it can be easy to get consumed in the day-to-day task of properly caring for him or her, but it is also very important to look beyond the immediate present and devote some time and energy into planning your child’s future.

What to Consider

When planning for your family’s needs beyond your lifetime there are many considerations that you must look at. For example, the process of purchasing a life insurance policy is chalk-full of legal implications that must be looked at carefully. Many well-meaning families have named their special needs child as the beneficiary on their life insurance policy thereby losing his or her eligibility for financial aid from the government. Due to this, it is crucial that you consult with a financial adviser, life insurance agent, or attorney who specializes in families who have a special needs child in their care.

Life Insurance as a Financial Safety Net

An attorney can assist you in setting up a special-needs trust, which is a very important tool if you believe that your child will need government aid. A special needs trust will hold assets for your child, and can be designated as the beneficiary of your life insurance policy. In most cases a family member will act as a trustee and distribute the money accordingly in order to give your child the special care that he or she needs. When properly set up, a special needs trust will provide financial assistance in order to maintain you child’s stability and quality of life as well as preserve their eligibility for government financial aid.

Role of Life Insurance

Life insurance plays a crucial role since the majority of families cannot save enough of a financial nest egg in order to secure their child’s lifetime needs. Life insurance coverage will provide security in the case that one or both parents die prematurely. There are specialized life insurance plans designed for special needs care. There are a growing number of insurers who are establishing life insurance products specifically for special-needs planning. Life insurance agents are also becoming more fully educated on how to work with families who have a special needs child in their care, as it takes a broad and deep knowledge and understanding of the financial situation of these families.

Tips For Utilizing Life Insurance to Plan Your Special Needs Child’s Future

It is crucial that you ensure that you have an adequate amount of disability insurance, long-term care insurance, and life insurance for yourself in order to ensure that your family will not be financially strained in the case that you pass away, become disabled or are in need of long-term care. It is recommended that you invest money into a whole life insurance policy in order to finance your child’s future financial needs. A permanent life insurance policy will also provide cash value, which your family can use in case of an emergency. Also consider important riders when purchasing a life insurance policy, like a waiver of premiums (pays your life insurance premium if you become disabled) and an insurability rider (allows you to purchase more life insurance later on without a medical exam). Lastly and most importantly, do not procrastinate, now is the right time to start planning your child’s future.

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