Providing for a Loved One with Special Needs

Nearly 54 million Americans cope with special needs and the rising associated expenses, according to the National Organization on Disability.  And according to the Caregiver Action Network, in the U.S., 14 percent of caregivers care for a special needs child; 16.8 million are caring for special needs children under 18 years old and 55 percent of these caregivers are caring for their own children.

If you have a child with special needs or you care for a family member with special needs, then you know how much time and money it takes to provide them with everything they need.  Simply planning their day-to-day requires some effort, but don’t forget about their long-term planning needs as well.

You hope to be around as long as possible to provide for them, but what happens if you die prematurely?  What happens when you’re no longer there?  Financial stability can be provided through a Special Needs Trust, which can be funded by life insurance.

The Benefits of a Special Needs Trust

A special needs trust has many functions, but two really stand out:

  • A special needs trust can preserve the beneficiary’s eligibility for government benefits such as Social Security, Medicaid, and housing, among other programs.
  • A special needs trustee can manage the funds on behalf of your loved one.

Special needs trusts can be complicated so it is best to work with an attorney who has experience in special needs planning.  A professional can ensure the trust is appropriately written.  If prepared properly, a special needs trust can accomplish a variety of goals, such as:

  • It can allow you to leave property and resources for the benefit of a family member with a disability without losing important public assistance.
  • It can prevent siblings from being over-burdened with caring for a sibling with disabilities.
  • It can help the grantor to equitably distribute the estate.
  • When properly funded and managed, it can help ensure there is enough money to sustain an individual with a disability over time.

A special needs trust can help provide for many aspects of life.  To protect the beneficiary’s government benefits; however, the trust should not be set up to provide directly for basic shelter, food, or payment of cash to the special needs family member.

What it can help pay for includes, but is not limited to:

  • Personal attendant
  • Medical goods
  • Dental care
  • Surgery or medical procedures (not covered by government benefits)
  • Private rehabilitation
  • Psychological support
  • Home modifications
  • Stamps and writing supplies
  • Drug and alcohol treatment
  • Recreational and cultural experiences
  • Additional therapies and activities
  • Enrich quality of life
  • Computers and smartphones

The Trustee of a Special Needs Trust

When preparing a special needs trust, you need to name someone who will be in charge of managing the assets in the trust.  This person is called a Trustee.  The trustee needs to be chosen carefully since this person will have sole discretion in making distributions for the benefit of the special needs individual.

An ideal trustee would have the following qualities:

  • Similar values to yours
  • Financially savvy
  • A strong advocate for your beneficiary
  • Organized

The trustee has a lot of responsibility, so it’s important to note that it does not have to fall on one person.  The trustee can be a combination of an individual and a corporate trustee.

Funding a Special Needs Trust

Sure, a special needs trust sounds great, but where is this money going to come from?  Nursing services, transportation, therapy, service animals, etc… all of these things cost money.

Well, you (and any family members or friends who wish to do so) can fund the trust with personal assets, such as savings or Certificate of Deposits (CDs).  You (and others) can also name the trust the beneficiary of a will.  One of the best ways to fund a special needs trusts though is with life insurance.

The benefits of using life insurance to fund a trust:

  • Cost effective – provides a large sum of money for comparatively low premium payments
  • Typically protected from creditors
  • Death benefit is income and estate tax-free if properly structured
  • Can easily distribute proceeds between care for your special needs loved one and any other children or family members you wish to financially protect
  • Brings peace of mind that your loved one will be cared for even after your death

Your Next Step

No one knows what the future will bring.  If you haven’t planned for the future needs of your loved ones, no time is better than the present.  If you already have life insurance but haven’t set up a special needs trust, it’s not too late.  You have the option to update your life insurance beneficiaries to include the trust.

Remember, if possible, have an estate planning attorney who is well versed in the world of special needs documents help you.  If you do not yet have life insurance, you can get a term life insurance quote free and instantly. Contact us if you have any questions, our friendly agents will be more than happy to guide you.

3 Ways Life Insurance Can Benefit a Charity You Love

Would you like to make a charitable gift to help organizations or people in need; to support a specific cause; for recognition such as a naming opportunity at a school or university? Perhaps you would do it just for the tax incentives. There is any number of reasons, and life insurance can be one of the most efficient tools to achieve these purposes. So the question becomes, how does this work?

Let me list the ways.

1. Make a charity the beneficiary of an existing policy. Perhaps you have a policy you no longer need. Make the charity the beneficiary, and the policy will not be included in your estate at your death. This also allows you to retain control of both the cash value and the named beneficiary. If you want or need to change the charity named as beneficiary, you can.

2. Make a charity both the owner and beneficiary of an existing policy. This gives you both a current tax deduction along with removing the policy from your estate. Once you gift the policy, you no longer have any control over the values.

3. Purchase a new policy on your life. Life insurance is an extremely efficient way to provide a large future legacy to a charity in your name without needing to write the large checks now. The premiums are given directly to the charity which then pays the premiums on the policy. The charity also owns the cash value as an asset. I am using this concept in my own planning.

Many charities would prefer to have their money upfront, but if you cannot write that large check or don’t want to part with your cash today, a gift of life insurance is a most efficient method to leave a large legacy in your name.

Life Insurance for a Family of One

 

We spend a lot of time talking about how couples, families and businesses can protect their financial futures with life insurance. But what about if you are single—do you need life insurance, too?

There are those people who have no children, no one depending on their income, no ongoing financial obligations and sufficient cash to cover their final expenses. But how many of those people do you really know? And, more importantly, are you one of them?

I think it’s important, then, to illustrate how a life insurance purchase can be a smart financial move for someone who is single with no children. Asking yourself these three questions can help you get at the heart of the matter:

  • Do you provide financial support for aging parents or siblings?
  • Do you have substantial debt you wouldn’t want to pass on to surviving family members if you were to die prematurely?
  • Did family members pay for your education?

Don’t Take My Word for It

Life insurance is an excellent way to address these obligations, and in the case of tuition, reimburse family members for their support. But don’t just take my word for it. Instead, “do your own math.” This Life Insurance Needs Calculator can help you quickly understand if there is a need—a need you might not be aware of—that could be easily addressed with life insurance.

The most important reason for you to consider life insurance may be the peace of mind you’ll have.

In addition to addressing any financial obligations you might have, the current economic climate has made permanent life insurance an attractive means to help you build a secure long-term rate of return for safe money assets. The cash value in traditional life insurance can provide you with money for opportunities, emergencies, and even retirement.

For young singles, keep in mind that you have youth on your side. I don’t mean to sound trite. Instead, I’d like you to think about the fact that purchasing life insurance is very affordable when you’re young and allows you to protect your insurability for when there is a future need—perhaps, in time, a spouse and children.

While all of these reasons are valid, the most important reason for you to consider life insurance may be the peace of mind you’ll have knowing that your financial obligations will be taken care of should anything happen.

The Effects of Childhood Obesity

September is not only back to school month, but it’s also Childhood Obesity Awareness Month. Childhood obesity is a growing epidemic in the United States that affects more than 30 percent of children. This number has tripled since 1980 making it one of the biggest threats to the health of American children. If trends continue, children today could be the first generation to live shorter, less healthy lives than their parents.

When you are a parent, your goal is to protect your children. While you don’t have control over everything your children encounter, you play a major part in their health and wellness. Preventing and managing childhood obesity starts in the home. It’s easy to put the TV on for the kids while you get caught up on household chores. Sometimes that’s the best fix for that particular situation. It becomes a problem when this behavior becomes a habit and a lifestyle for your family.

Why is childhood obesity a health problem?

Childhood obesity has negative immediate and long-term health concerns. Obese children are being diagnosed with health conditions that used to be only seen in adults. Unhealthy weight can lead to medical problems such as:

  • Type 2 diabetes
  • High blood pressure and cholesterol
  • Liver disease
  • Bone and joint issues
  • Eating disorders
  • Fatigue
  • Respiratory problems such as asthma
  • Sleep apnea

Unfortunately, obese children may also face psychological difficulties such as:

  • Being teased and bullied
  • Becoming a bully
  • Self-esteem issues
  • Depression
  • Poor social skills
  • Stress and anxiety

Being a parent is stressful enough without having to think about your children dealing with health and/or emotional problems. And being a child these days can’t be easy with social media and unrealistic “expectations” that exist. There are simple ways to help establish good habits and encourage healthy lifestyles for your family.

Develop healthy eating habits.

This may seem like a no-brainer, but sometimes you need a reminder on how you can encourage healthy eating at home.

  • Eat lots of veggies, fruits, and whole-grain products
  • Choose lean meats
  • Limit sugar and sugar-sweetened drinks
  • Limit saturated fat
  • Recognize portion control

Get active.

Again, this may seem like common sense, but keep in mind how easy it is for kids to get in the routine of watching TV, playing video games or spending endless hours on the iPad.  As a parent, encourage your kids to get involved in sports or other physical activities at school.

Here are few ways to sneak some physical activity into family time:

  • Make a game out of household chores. After completing a chore list, have a reward of a dance off or play catch. If you’re feeling really creative you could pretend that all the toys need to be saved from the dirty floor and put safely in the toy chest. Be as fun and creative as you want to encourage everyone to help out.
  • Take pre and post dinner walks. If it’s a struggle to get the family to get out and go on a walk, make it interactive by playing “I spy” or a similar game.
  • If you have that TV show you just have to watch, use the commercial breaks as quick fitness breaks. Get the kids up and dancing or have a sit-up or push-up contest. It’s amazing how much kids love burpees!
  • Get extra steps in whenever possible. Take the stairs, walk to the store or park at the end of the parking lot. Just like adults, kids can benefit from the extra activity.

Instill good habits into your kids while they are young so that healthy living becomes a way of life. If childhood obesity isn’t managed, it can lead to serious health issues as an adult.

Obesity not only causes serious health conditions, but also leads to increased health care costs and higher life insurance premiums. One of the first things life insurance companies look at when determining your premium is your height to weight ratio and your health status.

Here at Quotacy, our goal is to get you the best price and policy for your unique situation. We work with multiple insurance carriers to shop your case and compare pricing and options. Feel free to contact us with questions or use our free quoting tool to see how much it would cost to protect your family.

Is Guaranteed Issue Life Insurance a Good Option?



We often get asked questions along the lines of “My aging parent is very ill and medical bills have drained his/her savings account, but I cannot afford to pay for the funeral if he/she should pass away.  Can I buy life insurance on my parent?”  In this scenario, we do not advise purchasing “regular” fully underwritten life insurance.  More often than not, term life insurance is going to be ideal for most people, but not in this scenario.

Why we wouldn’t recommend term insurance in this case…

Term life insurance would typically not work in this case because the coverage amount would be too small, the client would likely be uninsurable because of health issues, and the client’s age would be outside the range a life insurance company would approve coverage for.

What we would recommend…

When we get this question, we usually tell inquirers that they have two options:

  1. Take the money you would have spent each month on term insurance and instead put it into a savings account so it can start accruing interest. You can then access these funds later when in need of money for your loved one’s final expenses.
  2. Purchase a guaranteed issue life insurance policy.

What is a guaranteed issue life insurance policy?

Guaranteed issue life insurance is a type of life insurance that you cannot be denied coverage on, hence “guaranteed”.  There are a few things you should know about this type of insurance.

  1. Guaranteed issue life insurance is typically known as “last resort” life insurance. It’s meant for those who may have been denied previously and/or are not in good health.
  2. Guaranteed issue life insurance policies are designed so that surviving loved ones can pay for your final expenses, such as a funeral, burial, and medical bills.
  3. Guaranteed issue life insurance premiums will never increase.
  4. A guaranteed issue life insurance policy accumulates cash value.
  5. Guaranteed issue life insurance policies have significantly lower death benefit amounts compared to term or permanent policies.
  6. There is no medical exam or questionnaire required for guaranteed issue life insurance. The only factor that is really taken into consideration is the age of the insured.  Because of this, guaranteed issue life insurance premiums are higher per thousand than most other types of life insurance.
  7. Benefits are limited to the first two years. This is called a Graded Death Benefit period.  What this means is that if you die within two years of buying the policy for any reason other than an accident, your beneficiaries typically only receive the total amount of what you paid in premiums.  (This can vary depending on the carrier.)

So, if you’re in relatively good health, fully underwritten life insurance may be a better option for you.  However, guaranteed issue life insurance is a great option for those with a desperate need.

How much does guaranteed issue life insurance cost?

While you can get millions of dollars’ worth of term life insurance coverage, guaranteed issue life insurance coverage often caps at $50,000.  Again, its design is based around simply helping your surviving loved ones pay for your final expenses.

Quotacy works with Gerber Life to provide guaranteed issue coverage options.  Gerber’s guaranteed issue policy is available in all U.S. states except for Montana.  Take a look at the examples and table below to get an idea on what a guaranteed issue policy can cost.

Example #1

 John Smith is 55 years old and has been denied for traditional life insurance because of his Stage IV prostate cancer.  He does not want to burden his children with his final expenses so he plans on purchasing guaranteed issue life insurance.

He’s automatically approved without having to undergo a medical exam or fill out any health forms.  John obtains $20,000 in coverage and his premiums are $91.30 per month.

If John passes away within two years, Gerber Life will refund to his beneficiaries all premiums that had been paid plus 10% interest.  However, if John happens to die because of an accident unrelated to his health within those two years, his beneficiaries will receive the full $20,000 death benefit.  After two years, his beneficiaries will receive the full death benefit regardless of how he dies.

Example #2

 Jane Doe takes care of her 79-year-old mother Sally.  Sally does not have any life insurance and Jane is worried that she won’t have the funds to give her mother the funeral she deserves.  Jane decides to buy a guaranteed issue life insurance policy on Sally.

A $12,000 policy is enough for Jane to ensure she can pay for a proper funeral and burial.  Sally is approved for coverage and the policy will cost $165.70 per month.

Although this type of policy is easy to acquire, it offers less coverage and higher premiums than traditional life insurance, so explore all your options.  If you aren’t sure if guaranteed issue life insurance is the best choice for you or want more information, contact us here at Quotacy and we can help you.

Recap of Guaranteed Issue Life Insurance:

  • If you’re between 50 and 80 years old, you can be accepted for guaranteed issue coverage regardless of your health.
  • There are no medical exams to complete or health questionnaires to fill out.
  • Cash value accumulates within the policy.

Remember, term life insurance quotes are free to run on and there is no penalty for applying.  It doesn’t hurt to apply for term life insurance, then opt for the guaranteed issue if you end up being denied.  The more options you have, the better decision you can make.