Special Needs Parents Need To Consider Life Insurance

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BY JOHN LATONA

Parents of a special needs child will spend a lot of money on care throughout their child’s lifetime. Recurring expenses of any kind are what define a family’s financial lifestyle, so more bills and specific needs means a more expensive lifestyle.

Raising Children is Expensive
Kids are expensive. (You don’t say…) As a parent of two young children, I know this first-hand.

For those of you who have your first child on the way, or are considering having kids in the near future, it’s important to understand just how much raising little ones can cost so you can properly prepare. Well, prepare as much as you can with kids.

The U.S. Department of Agriculture estimates it can cost up to $233,610 to raise one child until they reach age 18. This estimate accounts for essentials like housing, food, education (excluding college) and daycare. But, expenses can vary by age of child, where you live and your lifestyle.

What many expecting parents don’t think about is how that figure changes when raising a with a child with special needs. Autism advocacy group Autism Speaks estimates that the average cost of lifetime care for a person with autism is $1.4-million, while a person with autism and an intellectual disability can require up to $2.3-million in lifetime care.

In any case, it’s impossible to know exactly how much money it will cost to raise your children. However, there is one way to protect your family and make sure they financially taken care of.

Ask yourself this: if you were no longer around to financially contribute to your household, would your family be okay? For many, the answer is “no” and that can mean a lot of uncertainty for families if their loved ones were to die. But, it doesn’t have to.

Protecting Your Family Financially
It’s pretty simple to protect your family financially, and provide a little peace of mind for yourself.

With life insurance coverage, in the event of the policyholder’s death, the insurance company gives your beneficiary a payout (called a death benefit) equal to the value of your policy. For example, a very healthy 35-year-old man with a spouse and young children can protect his family with a 30-year, $500,000 term life insurance policy for as little as $38 per month. In exchange for an affordable monthly premium, if he were to pass away during the 30-year time frame, his family would receive a $500,000 payout.

Your family can then use this payout to help meet ongoing expenses like the mortgage, child care and even final expenses like a funeral.

But each family has a very unique set of needs, and not everyone needs a $500,000 life insurance policy. How much life insurance you need depends on your age, income, residence, gender, family size and debt. You may not even need it… yet.

Coverage For Stay-at-Home Parents
If your child has special needs, one of those needs may be more attentive care, possibly in the form of a stay-at-home parent. You may wonder, “Should I still consider a life insurance policy if I don’t technically earn a salary?”

Life insurance is especially practical for stay-at-home parents. Consider the responsibilities: 24-hour care of children, assisting with homework and overall education, housekeeping, taking kids to appointments and extracurricular activities… and the list goes on. In fact, Salary.com estimates that all of the work a stay-at-home parent does is worth a salary of $143,102. If you’re at home caring for a child with special needs, that number increases dramatically. Your family may not need to replace a salary if you were to die, but they will still need to replace all your hard work, and other non-monetary contributions. A life insurance policy can help position your family well to fill the void.

Term Life Insurance vs. Whole Life Insurance
When researching life insurance, one of the first decisions you’ll usually be faced with is deciding between term and permanent life insurance.

While they come at different costs and advantages, both help provide financial protection to your family.

Term life insurance tends to be the simplest and most affordable option for life insurance and is often recommended by experts. It’s characterized by defined terms of coverage – usually 10, 15, 20 or 30 years. If you die during the term length, your insurance company pays an income tax-free death benefit in the amount of your policy’s value.

The right term length for you and your family might be until your kids are financially independent, significant debts are anticipated to be paid off, or you’ve accumulated enough wealth and savings. For the parents of special needs children, this could be a significant term length of 30 years, which provides enough time for you to save, build wealth and determine what kinds of needs your child will have over the long term.

Permanent life insurance comes in a few varieties, but the most common are whole life and universal life. With these policies, coverage lasts a lifetime, and there is the opportunity to build cash value that can increase or decrease over time. It’s considerably more expensive than term life insurance. While a 30-year, $500,000 term policy would cost a healthy 35-year-old man about $38 per month, a whole life policy could cost that man about $550 per month. While permanent life insurance policies are a good product that can financially protect your family for a lifetime, the premiums can be unaffordable for young parents or cause them to opt for less coverage than they really need.

The Case for Term Life with Special Needs Parents
Parents of a special needs child will spend a lot of money on care throughout their child’s lifetime. Recurring expenses of any kind are what define a family’s financial lifestyle, so more bills and specific needs means a more expensive lifestyle.

Term life insurance is particularly valuable in this case since it financially protects loved ones at an affordable monthly cost. This way, necessary funds can be allocated toward current needs and saving, and preparing for future ones.

Having life insurance coverage for caregivers is a substantial step in safeguarding your family and helping them meet their ongoing financial needs if you were no longer around. Buying life insurance is now easier and more affordable than ever. And, trust me, the peace of mind that comes with knowing that your spouse and kids are cared for is worth it. •

ABOUT THE AUTHOR:
John Latona is General Manager of Haven Life.