Can a special needs trust purchase life insurance?
Special needs trusts don’t typically buy life insurance policies. However, a trust is often the beneficiary of a policy. Parents set up a trust to hold assets and help pay for their child’s lifetime care after they are gone. Then, the parents designate the trust as the beneficiary of their life insurance policy. Other family members, such as aunts, uncles, and grandparents, can also do so. After the policyholder passes away, the death benefit helps to fund the trust.
Can someone on disability get life insurance?
People with disabilities can and do get coverage from life insurance companies. If the disability doesn’t impact life expectancy, then there may be little or no impact on insurability. However, any disability that impacts life expectancy will also affect a person’s ability to get many forms of coverage. However, guaranteed issue policies are available that provide a limited amount of protection regardless of health considerations.
What happens when a special needs child turns 18?
Once a child reaches age 18, benefits eligibility changes. They may qualify for supplemental security income benefits (SSI) based on their own income and assets (as opposed to their parent’s income and assets). In order to receive benefits, the child must meet the Social Security Administration’s disability standard, have less than $2,000 in assets, and receive minimal income – and that is one reason why many parents choose to set us a special needs trust to hold assets for their child out of that child’s name6.
What is the best life insurance policy for a child?
Children don’t typically need life insurance because others aren’t dependent on their income. Having said that, one of the most cost-effective ways to get life insurance coverage for a child is to take advantage of a child coverage rider (or optional clause) on a parent’s life insurance policy, if available.
