Using Your Life Insurance to Provide For your Loved Ones With Special Needs
According to the National Organization on Disability, roughly 57 million Americans live with special needs. Also according to the Caregiver Action Netowrk, 14% of caregivers care for a special needs child; 16.8 million are caring for special needs children under 18 years old and 55% of these caregivers are caring for their own children.
If you have a child with special needs or care for an individual with special needs, you know the daily tasks this includes to ensure they are cared for. It takes a lot of time and money to provide care to a child with special needs.
Financial planning can help you and your family members cope with the stress that comes with providing the care needed for a person with special needs.
Follow these tips to plan financially:
1. Protect your child’s eligibility for government benefits
Make sure that there are no assets in your child’s name that go above the total of $2,000. When someone has assets worth over $2,000, they are disqualified from many federal and state assistance programs, including Social Security and Medicaid.
Be sure to enlighten your friends and family about this information. If a family member wants to leave inheritance or write a hefty check for you loved one with special needs, this could put your child over that threshold and the government could freeze your child’s benefits.
2. Purchase life insurance to protect your child
Those who have children know how much money you invest in raising and providing for them. The average cost of raising a child from birth to age 18 is $240,000. If you think that is a lot, raising a child with special needs can be quadruple the cost.
Funding the medical expenses can be stressful and almost impossible. Buying life insurance with a special needs trust listed as a beneficiary can significantly help your financial planning.
Because life insurance proceeds would be included in your child’s assets if you named them the beneficiary, naming a special needs trust instead can protect your child’s government benefit eligibility.
3. Write up a will
Writing a will and listing a person who will be the guardian of your loved one is extremely important. The state would decide for you if you pass on without writing up a will. Most people recommend hiring a lawyer who works specifically for people with special needs and knows the laws surrounding individuals with special needs.
Stating in your will that your child with special needs is not the heir of your estate, but that the special needs trust it, will ensure that they still qualify for government programs.
4. Do not push off planning for your future
When your child turns 18, the government considers them a legal adult. Depending on your child’s disability, you may need to be appointed legal guardian of your adult child if he or she will not be able to make decisions about their medical treatments and finances. If your child can be considered competent at times, then having him or her name you as durable power of attorney may be the easiest route for your loved one.
The contemporary life insurance market is way more extensive than a source of income for beneficiaries when catastrophe strikes. With a plethora of options, these plans offer you and your entire family peace of mind, and often give your money investment opportunity to allow you to enjoy the money invested during your lifetime.
Choosing the perfect life insurance plan depends as much on your financial needs as it does on your health class rating. We will assess all factors and guide you through every option until we find the perfect plan for you.
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