How to Leave Life insurance to a Disabled Child

You buy life insurance to help your survivors financially after your death. Particularly if you have a disabled family member, this coverage will come in handy. Yet, because of the individual’s needs, how you structure your coverage might vary. What are the factors you must consider when leaving coverage to a disabled child?

Step One: Consider the Necessary Amount of Coverage 
If you want your life insurance to go to your disabled child’s needs, you’ll need to choose the right settlement. Policies might offer anywhere from a few thousand dollars to over $1 million in coverage. Think about your child’s long- or short-term needs. You’ll better know how much money will help them.

The good news is that many insurance policies offer cash accumulation options. Thus, you can leave a tidy sum behind. The money also won’t go through probate. Your beneficiary can receive the sum before any creditors.

Step Two: Remember Your Child’s Age
Whether your child can receive the policy funds directly might depend on their age. Children under 18 usually cannot inherit. You might need to make temporary arrangements for someone else to receive the funds. This party might include another individual or a trust to manage fund distribution. When the child turns 18, you might be able to alter the beneficiary to become the child.

Step Three: Think About the Child’s Long-term Needs 
If a child has certain disabilities, you might not be able to leave the money to them. Even after coming of age, your child might not be able to manage a settlement.

For example, children with severe mental, developmental or emotional disabilities might not be able to care for themselves. Thus, they might not be able to manage the money. Again, you might need to establish a legal framework to govern the beneficiary’s access to the funds. This won’t apply in all cases, though. While others might have disabilities, these could have no impact on their ability to make decisions about using insurance.

Step Four: Make Proper Legal Arrangements 
To leave life insurance to a disabled child (or any individual, indeed), you might need to take legal steps.

• Note in your last will that your child is the policy’s beneficiary. 

• If you cannot name a child the direct beneficiary, name an alternate party. State in your will how that party should use the money. 

• To strictly govern the use of the money, establish a trust. When you die, the money will go into the trust account. The trust will control who can access the money, and how they will use it. It’s a secure way to make sure your money goes to your child’s needs.

With the right care, you can accommodate a disabled child after your death. Let your life insurance become a line of defense for their security.