You know at some point you will not be around to provide care for your special needs child, which has probably already led you to consider taking out a life insurance policy that will pay out benefits to cover the care of your child. A first step is to determine how much money your child’s care will require.
Forecasting the ongoing and lifetime costs associated with caring for someone with special needs is going to vary depending on the family involved. Still, there are some general guidelines any parent can benefit from.
Assess current ongoing needs
When evaluating the continual needs of your child, you should consider the regular expenditures you currently make on your son or daughter. Your child may require medical care, therapy sessions, specialized equipment and caregiver support, all of which should go into a cost forecast. Also consider transportation costs for medical appointments and other essential activities.
Forecast lifetime costs
In addition to immediate needs, project the lifetime costs of caring for your child. Medical treatments, therapies and any other foreseeable expenses are bound to add up through the lifetime of your child. Also consider the living arrangements of your offspring and how much it will take to sustain them for the life of your loved one.
Deduct government assistance
When calculating life insurance coverage, deduct any support your child receives from government assistance programs, such as Medicaid and CHIP. These programs reduce your financial burden and allow for a more accurate assessment of the coverage needed to bridge the gap between your available resources and the needs of your child.
At the same time, you should build protection into your estate plans so your child does not lose out on government benefits. You could structure your life insurance policy to pay out to a special needs trust. This trust will manage the funds on behalf of your child without jeopardizing access to government assistance.
With your care calculations in mind, you may also directly place money in the trust in addition to planning for a future life insurance payout. Thanks to the flexible nature of estate planning, you have a variety of options to work with.
