How to get Life Insurance for a Child with Special Needs?
The primary purpose of buying life insurance is to ensure that your family is financially secure in your absence. With the parents of a child who has special needs, this concern is grave. They need to choose a life insurance policy, wherein, in the unfortunate event of their demise, there are provisions of creating a corpus to take care of their child’s needs. Children with special needs require special care and adequate finances.
There are no specific right child insurance plans for protecting the needs of your child. When you, as a parent, are choosing life insurance, ensure that you choose sufficient coverage. The coverage should be able to meet the needs and expenses of your child, along with paying off your debts. When you identify the right insurance policy for your child, ensure that you choose the right amount of coverage.
The Jeevan Aadhar and Jeevan Vishwas are traditional policies and offer a huge payout. However, while buying insurance when you have a child with special needs, these policies alone would not suffice. To support daily care and everyday expenses, along with these plans, you can consider getting any other type of life policy from the ones mentioned below-
Term insurance
Term insurance is one of the simplest forms of life insurance plans. It is known for providing a huge sum cover for relatively low premiums. However, the policyholder only receives the payout in case of demise within the tenure of term insurance. For parents, having a term plan would be perfect as it can create an instant estate, providing security for their child. Also, the low premium rates for high coverage will ensure that, as a parent, you get good coverage without having to dig a hole in your pocket. The higher the coverage, the better, as in an unfortunate event, these funds would come in handy for child care and paying off any debts. Term insurance is an excellent buy for individuals who have responsibilities and liabilities.
Endowment plans
An endowment plan is an effective insurance plan for a child with special needs. With this product, you receive the sum covered in case of your demise or when your endowment plan matures. Unlike traditional life insurances, endowment plans have a two-in-one benefit, where along with providing funds, you also generate returns. However, before you buy an endowment plan, check on the returns. If the returns are low, they are not worth the high premiums.
Whole life insurance
Whole life insurance is what life insurance is at its core. Similar to a ULIP or an endowment plan, you receive a guaranteed cash value with whole life insurance. After a term plan, whole life is probably the second most suitable option when you have a child with special needs. With a whole life plan, you can withdraw funds or take a loan whenever you urgently need funds. This policy has a fixed amount of premiums that one has to pay on time to keep the policy active. Also, the guaranteed death benefit will take the stress of providing financial security away. When you have a child with special needs, the best choice is to have a combination of term life insurance and a whole life policy. With term life, there will be enough cover until a fixed age. Alongside, the whole life insurance will keep generating sufficient cash value to meet any requirement of funds when needed. However, the major drawback of whole life insurance is that from an investment point of view, it yields low returns and cannot beat inflation.
Before you buy life insurance as a parent of a child with special needs, ensure that you do your calculations and get the real numbers. Ensure that you consider inflation when you are choosing a life cover. To generate a sufficient corpus in the future, ensure that your investments meet the inflation rates at the very least. Financial planning is a must for ensuring that you have enough funds to take care of your child with special needs. A combination of a life policy and other investments will ensure that you and your child’s future is secure.
