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Is There Life Insurance for a Special Needs Child?

parents with special needs son

By Byron Udell | July 26, 2017

Special needs children present exceptional parental challenges. But how can you ensure that your special needs child will be financially taken care of after you’re gone? Find out more about Special Needs Child Life Insurance options.

As any parent knows, raising a family can be both rewarding and challenging. But what if you have a “special needs” child? A special needs child is typically any child who requires extra care and attention due to a medical, emotional or learning disability, and who also may require additional medication, therapy or instruction.

Caring for such a child can require a level of love, devotion, and dedication that can sometimes seem overwhelming. Parents can feel frustrated and alone as they search for information, understanding, and support they desperately need.

If that child was your child, what would happen if you or your spouse suddenly passed on? Would that child have the resources necessary to survive without you? Who would pick up the slack…emotionally, physically, and financially? How would that child get the care he (or she) needs? How would the bills get paid?

One of the most amazing financial instruments available to you and your family is life insurance. Life insurance is, by far, the best way to turn pennies into dollars when your loved ones need it the most. Whether you purchase a Term Life or Whole Life policy, having life insurance that’s in force when you die is the key to providing financial security to your family.

So how does Special Needs Child Life Insurance work?

Once you have purchased that life insurance, the next step is to set up a Special Needs Trust. This type of trust is specifically designed to protect the present and futures needs of disabled or mentally ill beneficiaries. You can use this trust as the vehicle to park your policy’s death benefit (the whole payout or just a portion) in this “garage” (as it were), so your child is financially protected after you’re gone.

But what about just creating a will? Isn’t that protection enough for my child?

Not exactly. In a traditional will, if you leave property or other assets (including cash) directly to your offspring, it could disqualify the child from applying for government assistance down the road. Also, a will can be contested in the courts, which could potentially delay access to those funds for years. But a Special Needs Trust is specifically designed for a very precise purpose…protecting the rights of a special needs child.

Certain types of federal assistance programs (Supplemental Security Income, Medicaid, and others) have income eligibility requirements that an applicant has to meet in order to qualify for benefits. However, if the applicant’s financial resources and reserves are too large…this could adversely affect the amount of aid that person can apply for.

But if you set up a Special Needs Trust, it is the trustee who has access to the assets, not the child. So as long as the child doesn’t have direct access to the funds, government assistance administrators tend to take a more “hands-off” approach.

In short, if you have a special needs child, this type of trust can provide the financial protection and flexibility that your child will probably need after you’re gone.

For more information on life insurance, talk to AccuQuote. We can provide quality, competitive life insurance quotes from the top-rated, brand-name insurance companies you know and trust.

We only work with highly rated insurance companies – brand names you trust. You may be able to save money without sacrificing quality and strength.