Children with special needs may encounter financial difficulties without Life Insurance

Special needs children require a lot of care, not just in their younger years, but also as adults, often at the hands of a dedicated caregiver. The monthly expenses of caring for a child with special needs can easily run into hundreds of dollars.

Parents are often too overwhelmed with the daily demands of these children, to worry about looking into the right financial planning vehicle to provide for special children in their later years. However, when you are the parent of a special needs child, you should consider planning your insurance so that your child receives the maximum benefits. A term life insurance is the most affordable insurance plan.

Some of the difficulties commonly encountered when providing for the future of a child with special needs.
Children with special needs often need assistance all through their adult life, and obviously parents cannot provide their personal care indefinitely.

Many parents think of making a sibling the beneficiary of their special needs insurance plan, and entrusting the sibling with the responsibility of succeeding themselves as caregivers. In such a case, what if the sibling predeceases the special needs child, or worse, misappropriates the money (there have been too many instances)? Some parents think that making a special needs child a direct beneficiary of their insurance policies is the best approach. What they don’t know is that by doing so they would disqualify the child from receiving government assistance. Any inheritance of more than $2000 will disqualify your special needs child from federal assistance and state assistance programs.

Therefore it is pertinent that parents not just plan for the future, but also make sure that their planning is correct, and is one that does not disqualify the child from getting the government assistance that he or she is entitled to, as a United States citizen.

Life insurance planning
Most parents with special needs children have seriously considered one or both of the above-mentioned ‘mistakes’. But as you can see, they are both not the ideal way to make sure your child has enough money (and therefore adequate care) when you are not around.

The answer to the above challenge is to form a trust, and make the trustee a beneficiary to your life insurance policy, so that the trust is funded by your life insurance benefits (and even other assets if you so wish). The trustee is not allowed to benefit personally from the trust. Further, receiving financial benefits via a trust won’t disqualify children with special needs from receiving government assistance. So forming a trust will overcome both the problems highlighted above.

In addition to forming a trust, here are more tips for you when planning your child’s future.

Work out details of your plan, and make sure other family members are clear about it too. Despite the formation of a trust, a child with special needs will need a place to stay. Involve the whole family in deciding where that will be, especially when after both you and your spouse are no more. Talk to an attorney and financial advisors who specialize in special needs cases. Write a letter of intent and leave it your attorney. Your attorney will help you draft it. Work out what government benefits your child is entitled to.

Choosing the right life insurance policy
Permanent life insurance policies usually provide for a cash value in addition to the sum insured and can be very useful in financial planning for the needs of a special needs child. Term life insurance policies provide only the sum assured, but are available for pre-defined terms only. Keeping in mind that parents may already have a lot of financial responsibilities, term life insurance is the more economical option, provided it is taken for a long-enough term, or comes with an option to favorably extend the policy at the end of the term. Term life quotes can be easily obtained through the Internet from a multi-carrier insurance agency. Keeping in mind that you are planning for a special needs child, you would probably find it beneficial to follow-up the free online quote by meeting with a representative for an in-depth discussion.

Be prepared, the right way
A lot of families are quite unprepared to deal with the future needs of children with special needs. These days, medical technology is helping children with special needs to live longer and more productive lives. Insurance and its correct disbursement via a trust are key components in making sure that they are happy and cared for though life.

About AccuQuote:
AccuQuote is a leader in providing term life quotes to people across the United States. In 1986 it began operating with a single goal: to make the process of buying term life insurance as easy as possible for its customers. Their experienced professionals consistently deliver the most affordable term life insurance rates by comparing thousands of life insurance policies from dozens of top-rated carriers.

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Tags: Children, difficulties, encounter, financial, insurance, life, Needs, Special, Without