Life insurance for caregivers of children with disabilities

Every family has its own unique story, and as a caregiver of a child with disabilities, your priorities might be a bit different. While life insurance often helps ensure that kids have financial support as they transition into adulthood, your child's financial needs may last a lifetime.

It’s a lot to think about, but with the right planning, you can make sure that even if you’re no longer there, your child will continue to receive the care and support they deserve. It all begins with understanding how life insurance can work for your family.

Analyze costs

Think about medical expenses, therapies, caregiving, and daily living costs.

Plan for the future

Consider long-term needs such as specialized housing and quality-of-life enhancements.

Factor in inflation

What things cost now will probably increase over the years.

Talk to a planner

A financial professional can help you estimate expenses and ensure that you’ve covered everything.

Understanding the types of life insurance

There are 2 primary kinds of life insurance, and each has its pros and cons:

Term life insurance

Whole life insurance

Funding a special needs trust with life insurance

A Special Needs Trust (SNT) helps ensure that your child can access financial support for their care without disqualifying them from government benefits such as Social Security income or Medicaid. Consult with an attorney or estate planner on setting up a special needs trust.

How it works

You can name the trust as the beneficiary of your life insurance policy. When you pass, the payout is directed to the trust, which can then cover caregiving, education or other services to help improve your child’s life.

Selecting a trustee to manage the funds is essential, so it’s important to choose someone you trust to handle financial matters in your child’s best interest.

Listing a beneficiary

It’s important to be cautious when naming beneficiaries. Naming your child directly could unintentionally disqualify them from government benefits. Instead, naming an SNT as the beneficiary ensures that the funds are used for their care while maintaining eligibility for assistance programs. This is also a good time to review and update your estate plan to ensure that everything works together.

Talk to a professional

Planning for your child’s future can feel overwhelming, but taking the right steps now can ensure their well-being for years to come.