If you are a parent of a child with special needs, planning for the long-term may include providing financial assistance for when your child becomes an adult. Life insurance should be a part of every family’s financial plan. However, for families with a member who will require assistance for their entire life, there are exceptional circumstances that must be considered.
Personal Life Insurance
The first step in life insurance planning includes purchasing a policy on yourself. This policy will provide the funds necessary to help your spouse and children remain financial stable. The life insurance benefits can help pay the mortgage, automobile loans, and other debts. Money can also be used to fund future expenses such as college tuition or a wedding.
There are different types of life insurance policies you can consider. Whether you choose term, variable, or whole life, the important thing is to purchase enough to provide for those left behind. This may include sums earmarked for a special needs child’s therapy, schooling, or medical bills.
Survivorship Life Insurance
Your child will still have your partner to care for him or her. Your individual life insurance policy will provide the money necessary to reduce the financial burden you leave behind. But, parents of special needs children may need to plan financially for what happens when your child outlives both of you.
Fortunately, there is a very cost-effective way to provide the financial assistance your child will need well into adulthood – survivorship life insurance. Also known as second-to-die life insurance, this policy is written on both parents. Since the risk is spread among two individuals, the cost of survivorship life insurance is much lower than an individual policy.
Planning For The Future
Survivorship life insurance is an affordable way to provide the financial assistance your special needs child may require in the future. For children receiving public needs-based assistance, it is recommended survivorship life insurance be placed in a special needs trust. The trust allows your child to continue receiving public benefits while also providing direction on how the benefits can be used. Survivorship life insurance is a relatively simple product. However, financial planning for special needs families can be very complex. Please contact me or someone specialized in special needs planning to learn more.