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Life Health > Life Insurance

Kids Face Special Needs Gap

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About 62% of parents of children with special needs have failed to plan for what will happen to the children after the parents die.

Researchers at Hartford Financial Services Group Inc., Hartford, have published that finding in a summary of results from a survey of 580 parents of children with special needs.

There are about 2.6 million U.S. children with special needs, and 3% of the parents surveyed said they spend $500 or more per month to cope with their children’s disabilities, the researchers report.

About 60% of the parents expect disability-related costs to continue into adulthood, but fewer than half have a plan for covering the costs, the researchers found.

When the researchers looked at results for parents who said they have made plans, about 65% said the plans consisted of buying life insurance.

The percentage of parents with life insurance was 85% for parents of children ages 4 and under, but just 46% for parents with children ages 13 to 18.

About 51% of the parents with a policy did not know that they could use the accumulated cash value in a permanent life insurance policy during the child’s lifetime to cover some of the cost of their children’s needs, and 72% of those who knew they could do this did not take advantage of that feature.

Only 42% of the parents said they were confident that the arrangements they have made for their children would cover their children’s lifetime needs.

Meanwhile, only 16% of the parents with a plan created it with the help of a financial advisor or attorney, the researchers found.

As a result, 50% of the parents of special needs children plan to leave money directly to the children, and 58% have named their children as the beneficiaries of their estates, the researchers report.

Either move could disqualify the children for government benefits and services, Hartford says.


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