What life insurance product should you use for special needs planning?

Many families have children with special needs. These moms and dads work extra hard at giving their children all they need, and taking extra good care of them. Providing for them financially is the foundation of that work, and life insurance is integral to that financial planning.

But what type of life insurance should be used?

As you know, there are two types of life insurance: term and permanent. Term is used when coverage is needed for a defined amount of time – to cover a mortagage or business loan, for example. Permanent is used when the need for coverage is ongoing.

When a family has a special needs child who is not expected to become financially self-sufficient the parents certainly need to be covered on an ongoing basis. The policy needs to last as long as they do, on a guaranteed basis. When they pass on, the benefit will be paid to the special needs trust or caretaker, money remains available to support their child when they are gone.

Recognizing this need for permanent coverage, the parents simply have to decide between a cash-oriented whole life policy, or a less expensive universal life product with little or no cash. Both will offer lifetime guarantees on the premium and death benefit. These are critical for planning and budgeting.