Many of us have a life insurance policy to take care of any debts and care for our families should anything happen to us. But families with a special needs child should consider additional coverage. An article from Savvy Parents highlights five types of policies every family with a special needs child should investigate.
#1: Life insurance. While one of the most common policies, families with a special needs beneficiary may need to consider increasing their policy’s value. With higher expenses for care for a special needs child, you should think about how your family would pay for care if something happened to you. In the case of families with a sole breadwinner, the death of an income-earning spouse can be especially devastating. Speak with your insurance professional about what would be the appropriate amount of coverage for your family.
#2: Worker’s compensation. If you decide to hire someone to assist with the day-to-day care of your child, you may need a worker’s compensation policy, especially if you hire them directly and not through an agency. In some cases, you may be able to add this coverage as a rider on a homeowner’s policy. This doesn’t apply in every situation or every state, so you’ll need to speak with a professional about the requirements for your situation.
#3: Disability insurance. Did you know that approximately one in every eight workers become disabled for five or more years over the course of their working lives? Most of us don’t realize our chances for disability are so high and fail to plan accordingly. A long-term disability policy can fill in the gap for a disabled wage-earning spouse. Some insurance companies also have policies for a stay-at-home parent. You’ll want to consider this insurance option, as well.
#4: Long-term care insurance. For older parent, a long-term care policy is crucial. A long-term care policy should be a consideration for anyone over age 50 with the significant increase in the costs of long-term care in recent years. It’s particularly important for parents of a special needs child, however. Many parents rely on care from their children as they age, but that may not be an option for parent of a special needs child. Look into long-term care insurance around age 50, when you’re younger and less likely to experience challenges with any health tests.
#5: Social Security. Not many of us would consider Social Security to be insurance, but that’s really one of the best ways to view it. In essence, it’s a type of government-run insurance system. Check with your employer to ensure you’re properly paying into Social Security. Once your special needs child becomes an adult, he or she may qualify for Supplemental Security Income and may even receive an increase in benefits once you or your spouse become eligible for Social Security benefits. You’ll want to work with an experienced estate and special needs planning attorney to ensure your child is and remains eligible for crucial government benefits.
One other important thing to note: be careful with your policy’s beneficiary designations. If you’re not careful and name the special needs child as the beneficiary, you could jeopardize their eligibility for government benefits, especially ones that are needs-based with asset tests. If you can, name a special needs trust as the beneficiary instead to protect their eligibility. Work with an experienced estate and special needs planning attorney to draft this document, as it’s a complex task.
While we at Family Estate Planning Law Group don’t sell insurance, we have seen the ways a thoughtful purchase of a policy can help families through a difficult time. Not all types of insurance are a fit for all families, so speak with an experienced insurance professional to discover what policies will best care for our family.
For more information on the importance of special needs planning, explore our website and contact us to schedule your consultation today!
Reference: Savvy Parents "Five Must-Have Insurance Policies When You Have a Child with Special Needs"