Families that have a child with special needs should initially approach their life insurance program like any other family.
The fundamental question to ask is, “What is the economic impact to the family if Mom and/or Dad were to die?” For most families, the loss of one or both parents is emotionally and financially devastating. As complex as this scenario is for typical families, families with special needs are particularly vulnerable if one or both parents die.
The biggest mistake I see among clients who have met with an advisor who claims to have experience working with families with special needs is when the insurance advisor focuses too narrowly and only plans for the “future care” of the child with special needs. This planning mistakenly focuses on a permanent life insurance policy to fund a special needs trust, instead of addressing both the immediate and long-term planning. Permanent insurance is an important part of planning for special needs, but it is imperative to address the immediate risks in addition to the long-term risks. Term life insurance is critically important to most families with special needs and it is affordable. Most families we work with are single-income families because one parent is typically a full-time caregiver. Bottom line: don’t forget a high quality, convertible term policy. This protects the spouse, the typical children AND the child with special needs. And remember, whenever possible, we don't want to make a disabled child the direct beneficiary or owner of a financial asset. Questions? Please call.
Although this article is specific to life insurance planning, we are dedicated to helping families with a loved one with special needs with their general financial planning. Call to see if we may be of service.