It seems like the topic of special needs planning drops into my lap every 3-4 months. In the course of a conversation with a new client I'll learn that there is a special needs child in the picture. Like a snowflake, all situations are different, but in many cases they can be handled nearly the same.
Let's look at an example. A middle-aged couple has 3 kids, one of which is autistic. While it's assumed that one of the other two kids will take responsibility for their sibling down the road, nothing is written in stone. Mom and Dad can care for the child up to a point but someone is going to have to care for them as they get older. And what happens when Mom and Dad pass away?
Most importantly, special needs kids grow to become special needs adults.
A Special Needs Trust is typically the answer. First and foremost, I highly recommend you find an attorney who has a couple of these irrevocable trusts already approved by a judge. As an attorney friend of mine said when discussing this topic with me, "Do not let an lawyer 'practice' on your client!"
A Special Needs Trust works like this: The trust is established but without any money inside. The money comes from a second-to-die life insurance* policy on the parents. The logic behind this is that if one parent dies, the surviving parent can still care for the child. At the death of the second parent, the life insurance policy is paid to the trust which then can help support the special needs child/adult.
The key to all of this is planning. As I stated earlier, all cases are different, however taking the time to prepare can really lessen the stress and financial burden down the road.
*We suggest a second-to-die guaranteed universal life policy. For more information, contact us through our website at Surf Financial Brokers.
Friday, May 27, 2016
Monday, May 2, 2016
Sick or Hurt? Can't Work? Need a HUG?
May is Disability Insurance Awareness Month (DIAM) and I'm sure you're still worn out from last year's awesome good time.
But seriously, DI is one of the most undersold insurance products out there and for several reasons.
First, unless your employer offers it to you, most people don't go out of their way to find out how to get a policy. We at Surf Financial go out of our way to help the large number of self-employed secure a DI policy. Everyone from farmers to chiropractors, accountants to engineers and, yes, even stay-at-home spouses can and should have a disability policy in place.
Another reason why people do not have DI coverage is that many agents don't understand the product well enough to sell it. It's difficult to explain something that you don't understand. Luckily, most of our agents know the benefit of disability insurance and would love to help you.
Lastly, many people don't understand the process of getting a disability policy. Unlike life insurance, where your health is the major thing taken into consideration, DI underwriters need to look at your occupation (some are more dangerous than others) and your income needs. This is where things get tricky.
In a previous post, I mentioned the M.U.G. (mortgage, utilities, groceries) plan. Since many people rent, I've changed the mortgage to housing, thus the HUG plan. What are your monthly bills? How much would you need if you were sick or hurt and unable to work? A DI plan can be designed to cover those bills at a minimum.
On a scale of 1-10 with 10 being very important and 1 not important at all, how important is it to you that you can take care of your housing, utilities, groceries and more if you were unable to work due to a sickness or injury? How important would it be to make sure that your family was able to continue living a "normal" life should something happen to you as a breadwinner.
But seriously, DI is one of the most undersold insurance products out there and for several reasons.
First, unless your employer offers it to you, most people don't go out of their way to find out how to get a policy. We at Surf Financial go out of our way to help the large number of self-employed secure a DI policy. Everyone from farmers to chiropractors, accountants to engineers and, yes, even stay-at-home spouses can and should have a disability policy in place.
Another reason why people do not have DI coverage is that many agents don't understand the product well enough to sell it. It's difficult to explain something that you don't understand. Luckily, most of our agents know the benefit of disability insurance and would love to help you.
Lastly, many people don't understand the process of getting a disability policy. Unlike life insurance, where your health is the major thing taken into consideration, DI underwriters need to look at your occupation (some are more dangerous than others) and your income needs. This is where things get tricky.
In a previous post, I mentioned the M.U.G. (mortgage, utilities, groceries) plan. Since many people rent, I've changed the mortgage to housing, thus the HUG plan. What are your monthly bills? How much would you need if you were sick or hurt and unable to work? A DI plan can be designed to cover those bills at a minimum.
On a scale of 1-10 with 10 being very important and 1 not important at all, how important is it to you that you can take care of your housing, utilities, groceries and more if you were unable to work due to a sickness or injury? How important would it be to make sure that your family was able to continue living a "normal" life should something happen to you as a breadwinner.
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