Caring for special needs children

Clyde Parsons

Life insurance policies help policyowners financially prepare for the unexpected. But what about when something happens to the child of the person who has taken out the policy, such as severe illness or mental or physical disability?

In this article, I will be discussing three of the elements that come into play on the topic of cover for children.

Three of the elements

  • The health of the child at birth – Life insurance policies start from the moment of the child’s birth, providing that the parent has had the policy for at least nine months before this event. Should something happen to the child at birth that requires medical intervention, and meets one of the clinical definitions under criticalmillness cover, including child-specific claim definitions, then there will be cover for the child, for example, for surgery for cleft palate repair or club feet. One example of a child-specific condition would be a short-term NICU admission, with mechanical intervention for at least 48 hours after the child’s birth, which often occurs with premature babies. In this case, an insurer would pay out 75% of the child’s cover amount.
  • The health of a child in later life – The second aspect of this topic is where the child doesn’t present any conditions at birth that could impact their lives, but these occur later. Any parent’s worst nightmare is something happening to their child, and for a few hundred illness and injury events, some insurers can make a pay-out for a child, as well as a parent. For example, in the specific case of a child contracting bacterially confirmed meningococcal meningitis, which is an inflammation of the brain lining, some insurers cover up to 100% under critical illness if there is permanent neurological damage. In addition, the insurers cover any neurological condition that results in a permanent neurological deficit, which would pay out for both the parent, as well as their children, under critical illness.
  • The health of the parent – When considering the care of special needs children, it is not just the health of the child that needs to be considered – the health of the parent must also be taken into account. For example, in the case of a child who does not present physical or mental disabilities, the costs associated with that child would only need to be covered by their parents’ life insurance policies until he or she was financially independent, i.e. anywhere between 18 to 24 years old, depending on the selections made on the policy. In the case of a child with special needs, however, he or she may require care beyond adulthood, therefore he or she should be covered for the entire period that the parent is earning an active income. On the death, or permanent or temporary disability of the parent, the childcare costs of the special needs child would be covered under household expenses, for example, on a policy, as the associated expenses would need to be catered for until the parent retires. The parent is also able to lock in claim payments as monthly pay-outs, rather than a lump sum under death cover. Neither the beneficiary nor the guardian of the child, should the parent pass away, can change this, which can give great peace of mind to the parent of a child with special needs that a lump-sum insurance payment won’t be used for its intended purpose.

Each client’s unique needs

Another useful feature of some life insurance policies is that you can grow cover for the costs of different needs, at different rates. While a cost like groceries under household needs may grow at an inflation rate, costs incurred for special needs children like medical costs can grow at a rate higher than general consumer inflation.

A policy should be crafted to suit each client’s unique needs. This should be a guiding principle when it comes to policies.

This article first appeared on page 61 of FANews Magazine published in June 2021 and is attributed to Clyde Parson, BrightRock Actuarial Executive





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