I mainly sell LTCI, that is why I post the following here:
I have a disabled child that just turned 18. He get a SSI check just short of $500 a month. My wife and I are both 52. I want to make sure this money grows so he has something when we are no longer around to care for him. How about a second to die whole life policy that would put the money into a trust when we both die?
What face amount could we get at age 52 non smoker average health for both of us?
Do you think this is a good stategy or does someone have a better idea?
Does your child need a full-time caretaker, or is he/she capable of living by him/herself? Is your child capable of making financial decisions for him/herself?
My knee-jerk reaction is a second-to-die UL policy with instructions that the death benefit be used to fund an immediate annuity for the purposes of long-term care, but I would want to know much more before actually presenting that as a solid option were you my client.
A second-to-die UL policy with a no-lapse guarantee will get you the most death benefit for your dollar and is guaranteed not to lapse if you make the payments. If you're going to use an irrevocable trust, you can't just take money out for a loan anyway, so a whole life policy doesn't really serve any purpose in accomplishing your goals.
The face amount you can get will just depend on how much coverage you want, your income, and what you are willing to pay. A well-written cover letter will help if you are seeking a death benefit higher than what someone with a given income level would normally be able to obtain. We did a case this year (term, not second-to-die UL) on someone with a disabled child for a $2M death benefit whose income would not normally reflect that amount of insurance.
An estate planning lawyer should be able to help you design a trust that suits your needs on how you want the benefits to be paid out.
Parents of special needs children need planning that goes way beyond life insurance. Talk to an attorney with experience in situations such as yours to discuss trusts, guardianship, managing and preserving the trust assets, etc.
Some form of permanent life is definitely a consideration.
You are going to need advice outside this forum. Look for an experienced planner that specializes in special needs trusts. If you do not set up the trust properly, you could endanger your child's SSI benefits at your death.
You are right, a second to die policy is probably your best bet to fund the trust. We could argue all day about no-lapse UL versus whole life, just get the planner to explain the advantages and disadvantages of both options.
Also, are you saying that you are currently saving your son's SSI check? I know there are restrictions on what the money can be used for, make sure it is ok to save the money, even if it is for your son's benefit.
What face amount could we get at age 52 non smoker average health for both of us?
Do you think this is a good stategy or does someone have a better idea?
Thanks in advance for your help.
You need life insurance. You have a permanent need.
As far as face amount, that depends on how much you can afford.
Find a qualified insurance agent in your state to review your entire situation. You will also need to find an attorney to review your situation and draft up appropriate trusts for your situation.
I've attached a "Life Guide" for planning for children with special needs. For everyone else on the forum, this is included with the VSA subscription. (I removed the cover page from the attachment to preserve my anonymity.)
Does your child have ANY accounts in their name with over $2,000 in it? This alone could disqualify your child from receiving future government benefits.
Be careful when receiving gifts from family members. While they're well-meaning, you need to be sure that all help received is structured in a particular way.
While I'm no longer affiliated with MassMutual as a career agent, they have a program called "Special Care Planning" co-sponsored with The American College (founder of the CLU designation). With their resources available, you should be able to find someone local to you who has undergone extensive training in this area. (Just don't be suprised if they recommend a MassMutual life insurance policy.)
sorry to say but SSI is not going to cut it when taken care of this child.....really $500 a month...this needs to be taken care of with insurance....
Of course SSI isn't going to cut it. But with a properly set up trust, he can have the proceeds from the life insurance AND the SSI. Also, the child still being eligible for SSI entitles the child to numerous other state and federal assistance.
DHK's advice is spot on. Do it right and you get both. Do it wrong and the child's caregiver is forced to spend all the assets without any government assistance.
I'm not sure a second to die policy would be my choice, might be, but joint life expectancy is much longer than for just one life, might lean more for ins on your life. What is life expectancy of disabled child, if it is less than 20 years that might lead in different directions. I have done quite a bit of planning in situations as this, everything is fact and objective dependent.
I mainly sell LTCI, that is why I post the following here:
I have a disabled child that just turned 18. He get a SSI check just short of $500 a month. My wife and I are both 52. I want to make sure this money grows so he has something when we are no longer around to care for him. How about a second to die whole life policy that would put the money into a trust when we both die?
What face amount could we get at age 52 non smoker average health for both of us?
Do you think this is a good stategy or does someone have a better idea?
Thanks in advance for your help.
This is not complicated and is set up without much difficulty. The real question is how much money you have each month to commit and how much in additional funds you have to invest. Suggest you call Equity Analysts and ask to speak with Dennis Owens. They have a built in lawyer, CPA and tax advisor for things of this nature. 513-289-3897.
I mainly sell LTCI, that is why I post the following here:
I have a disabled child that just turned 18. He get a SSI check just short of $500 a month. My wife and I are both 52. I want to make sure this money grows so he has something when we are no longer around to care for him. How about a second to die whole life policy that would put the money into a trust when we both die?
What face amount could we get at age 52 non smoker average health for both of us?
Do you think this is a good stategy or does someone have a better idea?
Thanks in advance for your help.
As someone who has planned considerably for Special Needs kids, don't do a thing without talking to your attorney.
As an agent who has written 2nd-to-die for this purpose, let me tell you that my preference in situations like this is to write 1st to die -- one policy on each. Will the premiums be higher? yes.....But i can't tell you how many times in 18 years I've seen a couple divorce, or argue over the premiums, and then the policy goes away. With 2 policies you have a better likelihood that at least one policy will be there. Sometimes you have to throw away dollars and cents and accounting and talk pure pracitcality. The whole point of insurance is to provide something that couldn't be provided without it. A 2nd to die policy requires a longer period of time to wait for the cash, longer premium payments, etc. Estate planning for taxes is one thing....but when it comes to Special Needs planning, most of the cases I see -- and consult on -- I almost always advise a policy on each. I have also found most parents grasp this better and I also have real experience that shows that in the case of divorce or separation, it is the one asset that they hold onto because they know that if they pass away that it will very likely be the largest legacy they can provide.
I think the general consensus is that you need to speak with a qualified attorney outside of this forum. Your situation is delicate to your particular needs and a blanket statement will not do you justice. I believe the masses have spoken, and we all agree you should seek an external expert. It is good to see that, we - the agents on here - CAN actually agree on something every once in a while.
Estate Planning/Whole Life Question
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