The primary purpose of life insurance is to take care of financial responsibilities in the event of premature death.

There is a theory of decreasing responsibility that applies to most of us.  New parents with young children, a significant mortgage, some consumer debt and little savings, have much to carry, but not a lot in the bank to carry it.  They  earn a healthy income to manage their financial responsibilities, but, in the event of an untimely death, a major source of income disappears and the effects can be devestating.  As the years pass, the kids grow up to earn their own way, the mortgage is paid off and savings are accumulated.  In other words, the theory of decreasing responsibility kicks in.  As time passes, our financial responsibilities reduce and our assets increase; until then we need life insurance to replace our income and cover our debts if we were to die.

For parents of children with disabilities, the theory does not always apply.  A child with a disability may not be able to earn a reasonable income on a consistent basis when they are older.  As parents, financial responsibility for a child with a disability may never end, even after death.  The responsibility does not decrease, much less disappear.  In some cases the responsibility increases.

Unless parents have amassed significant wealth to support their child, they will have to figure out another way.  Families in the middle income bracket may not be able to amass significant wealth to leave a child with a disability, but they are in a position to afford life insurance.  A life insurance policy can leave a significant amount of money to support a child after death.

There are different types of insurance policies.  Term policies last for a specific period of time.  You can purchase a 20 year term policy, but after 20 years of paying premiums the coverage ends.  Alternatively you can purchase a permanent policy, which remains in force until you die, assuming you have paid the required premiums.  The cost of a term policy is much less than a permanent one.  However, the benefits of a permanent policy should far outweigh the cost and provide more for a child than what middle income earners would be able to save on their own.

There are many types of permanent policies.  Even with permanent insurance, there are some policies types are less expensive than others.  For example, a couple may purchase a “joint first to die” where one policy covers both the husband and the wife, paying out the benefit once the first person dies.  Such a policy costs less than individual policies.  A “joint last to die” policy where the coverage is paid out after the second person dies is typically even less expensive.

If you have a child with a disability and believe you will need to continue supporting your child for the duration of his or her life, you may benefit from consulting with an insurance broker who can understand your circumstances and is able to clearly explain appropriate options and you believe is working in your best interests.

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