Magazine article The Exceptional Parent

What Type of Insurance Should I Buy? We Should Use Life Insurance to Cover Potential Losses at Those Times Where the Losses Are Otherwise Unaffordable

Magazine article The Exceptional Parent

What Type of Insurance Should I Buy? We Should Use Life Insurance to Cover Potential Losses at Those Times Where the Losses Are Otherwise Unaffordable

Article excerpt

Harry Potter fans know that Harry's house was protected by an unbreakable charm. He was safe from frightening foes as long as he was inside the protection. Harry did not know about the protection until he was close to being an adult, but the protection was in place all the same.

As parents of children with special needs, we want to do everything we can to protect our family member with an intellectual or developmental disability. We advocate at schools for fair treatment. We spend hours in therapies and at medical visits. We find ways to create social and community opportunities for our family members who may not be able to make arrangements on their own.

We need to own life insurance. We need to own enough life insurance to provide protection for all of our family members in the event of the untimely death of a parent, caretaker or provider.

As a financial planner and wealth manager working with families like mine, I get asked the same questions many times each year, "Did I buy the right type of life insurance?" and "What type of insurance should I buy?" and "How much should I get?" These are simple questions and most of the time there are simple answers. Yet, families get confused as there are so many types of policies on the market sold by many different types of insurance representatives.

The basic concept of life insurance starts with the desire to take risk out of a family's life. We use small dollar premium payments to create a pool of money in the event of an untimely death. This is the purpose of insurance at its core. Health insurance. Disability insurance. Car and home insurance. In all cases, we pay monthly premiums to protect ourselves in the event of a catastrophe. Car insurance replaces the car or pays to get it fixed. We cannot afford to rebuild a home lost to fire--the homeowner's insurance is in place to do that.

Life insurance should be the same. We should use it to cover potential losses at those times where the losses are otherwise unaffordable.

My financial planning process for families with special needs member is called Blueprints. There are key Building Blocks to follow designed to help you provide the best life possible for your family member with special needs: 1. Take time to dream about the future. 2. Prioritize your goals. 3. Organize your financial life.

4. Meet with an attorney to put a special needs trust in place. 5. Get out of debt. 6. Build financial stability. 7. Buy life insurance. 8. Invest for the future and 9. Fund a trust.

Families working through the Building Blocks must focus on protection while building a strong financial life. Families like ours must think about caring for our family member with special needs even after we are gone. We must buy the most insurance affordable for the least amount of premium to cover lost income.

Think about the moment of loss if you were to pass away. Family members need to grieve. They have to have time to handle the emotions of loss. The fear and uncertainty get worse when they face financial misery. Life changes enough when a loved person dies. That stress just gets worse if there is not enough money to continue to pay rent or mortgages, to put food on the table and to pay for therapies, medical visits and the activities of daily life.

Our families have a greater need to have insurance in place than typical families. People with developmental disabilities do not have the same opportunities for independent living and employment as do others. We expect to pay more for our family members with special needs over their lifetimes than we do for our typical family members. We need to save and invest today to pay for those expenses in the future. Life insurance covers the giant hole left if we pass away before creating enough assets to pay for those future expenses.

There are five main reasons to buy life insurance:

1. To replace income

2. …

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