Insurance for parents of disabled child

[kittycat0604]

Hi,

I have a friend who has an autistic child. We talked about the life insurance for her and her husband. I think whole life insurance probably better than term, but I am not sure. And I tried to find readings(articles, personal finance book,etc) about managing finance for family with disabled children, no a lot, many personal finance book just have one sentence or a short paragraph. Anybody have ideas?

[sweeps]

Re: Insurance for parents of disabled child

I think you can make a strong case that parents of a disabled child should buy permanent life insurance. But they should be aware of the drawbacks (high fees early on in the policy, penalties for early cancellation, difficulty in comparing policies).

Money Article

[jodi]

Re: Insurance for parents of disabled child

As a service coordinator for individuals with developmental disabilities (autism included), your friends need to think about where their child will live if something happens to them. If the individual will be going into a group home or some type of care facility, they need to be careful about getting life insurance. Excessive income or assets can actually work against these individuals as they can not have a significant amount of money and still receive Medicaid and/or Supplemental Security Income (SSI). For example, the SSI asset level is $2000 - if a person has more than that, they will lose their benefits. The Medicaid asset level is around $4000. For that reason, many of the parents I work with will NOT include their disabled child on their life insurance policy or in their will.
However, if they really want to be sure that there is money set aside for their child if something happens to them, they can set up a supplemental needs trust - but this needs to be set up in a very specific way by an attorney in order to not count against benefits. If your friends have a service coordinator, they should speak with them about options. If they don't, they might be able to contact a local or state agency that provides services for individuals with dev. disabilities for direction.
Hope that helps! (I'm not sure if some of this information is specific to NY, so they will need to do their own research)

[boefixepa]

Re: Insurance for parents of disabled child

This is a very seriou situation for parents. My aunt has a child who is severly mental retarded and has gone through all kinds of work to make sure he is in a good enviornment. He has to be at least 40 now and lives in a care group home. I think his mental age is about 6-8 years old. I know they have another one of their children as a back up for them and I believe they have a trust fund of some kind set up just for his care. It's one of those situations that takes alot of planning.

[kittycat0604]

Re: Insurance for parents of disabled child

Thanks for all the information. I do think my friend need some professional help, like a service coordinator, atterney etc when her family plan for her kid's future.

Thanks again, people at this site are wonderful.

[defcon]

Re: Insurance for parents of disabled child

You can either use a financial planner or go through Met Life, Mass Mutual or Merril Lynch. Here is an article to help.

http://webreprints.djreprints.com/1060361049008.html

[bp019j]

Parents of a disabled child should seek the counsel of an attorney to properly draft wills and trusts. Life Insurance provides financial protection should something happen to one parent, or both. Determining what type and how much life insurance can be difficult, especially considering limited financial resources. It would be prudent to buy enough life insurance, and closely monitor needs. Reviewing your need for life insurance and ensuring financial protection for loved ones should be be done every couple of years. This will allow you to manage your life insurance portfolio efficiently.