Insurance Needs Analysis Planning
If the family with special needs does not want to complete a Comprehensive Special Needs Financial Life Plan we have another service called the Insurance Needs Analysis Plan. This type of planning focuses specifically on your insurance needs with the end result of funding the special needs trust. If the special needs family completes the Comprehensive Special Needs Financial Life Plan this type of planning is included.
What is meant by Insurance Needs Analysis Planning? The main goal of this type of analysis is to make sure there is enough money to support the family in case of death, disability or illness. In addition, assets or insurance is purchased to fund the special needs trust for the individual with special needs. A critical discussion in this analysis is answering the question of who will take care of the caretaker in case of disability or old age.
We begin this process by creating a family insurance needs analysis by answering the following questions:
- How much life insurance is personally needed to supplement income lost due to death of one of the spouses? What type of insurance is best and is it portable?
- Are the spouses covered by disability insurance in case of their own disability? Is it portable?
- Is there Long Term Care in place? What is the trend of costs in this area?
- How much do we need and what type of insurance is the best to fund the special needs trust?
If this type of planning is not done, families could potentially see their assets depleted in areas that were not planned. The tragedy here is than assets earmarked for the special needs trust are not there anymore, or if an insurance policy was purchased for the special needs trust the family may not be able to afford the premiums.
This needs analysis is gauged by the family’s expenses not income. To begin with we ask the question how much are you spending as a family and if a spouse were to die is that missing revenue stream protected? Is there disability insurance and long term care? We have an in depth discussion discussing the supplemental costs of the individual with special needs and making sure those expenses are covered by insurance to fund the special needs trust. Like the Special Needs Life Plan this type of planning is monitored at least every year. Events happen and the needs of the individual with disability change. The only way to stay current is to evaluate the Insurance Needs Analysis making sure it stays current.
Once the total need is established, we figure out how much can the family afford. We create the insurance needs based on the answers we receive in the initial meetings. Existing life insurance policies are compared to what is available in the marketplace, and taken into consideration with need and affordability. Based on this information, we make recommendations as to different options to make sure there is enough protection in place for the what ifs. We never replace existing policies for replacement sake.
There is a strategy to the Insurance Needs Analysis Planning and each family is unique. However, it is imperative to have completed this type of planning for fear that assets/resources earmarked for the individual for special needs will be spent taking care of the caregiver. Like the Comprehensive Special Needs Financial Life Plan once this type of planning is established, we are here for the long haul. We create a working document to move forward the next time we meet. Whether you can afford the entire need or not we have a document to begin the discussion from where we left off at our last meeting.
If you are a parent, you are naturally concerned about your child’s emotional well-being, physical health, and financial security. When you are the parent of a child with special needs, these concerns are magnified and require careful consideration now and when you are gone. Insurance Needs Analysis Planning is one way to cover the basics to ensure the quality of life for the family and you individual with special needs.