If you're raising a child with disabilities, you know firsthand the mix of deep love, responsibility, and concern for the future that defines your journey.
One of the biggest questions that keeps many parents awake at night is: What will happen to my child when I’m no longer here?
Life insurance can be a powerful way to answer that question—and give you real peace of mind.
In this blog, I’ll walk you through why life insurance matters, the different options you might consider, and how you can use it as part of a broader plan to protect your child’s future.
Planning is critical
Parents of children with disabilities often need to plan for a much longer timeline of support.
Unlike typical estate planning, where the focus is often on an inheritance that provides a financial boost, planning for a child with disabilities typically involves creating a permanent replacement for the care, structure, and financial security you provide today.
Government benefits like Supplemental Security Income (SSI) and Medicaid can help, but they aren’t designed to cover everything. They typically provide basic needs support—housing, medical care, and a small income supplement—but not much more.
Many children with disabilities will rely on these benefits for life. This creates a delicate balance: you want to leave enough to enhance your child’s quality of life, but not so much that you jeopardize their eligibility.
This is where life insurance can play a vital role.
How life insurance fits into future care planning
Life insurance can provide a pool of money that funds your child's needs for decades after you are gone.
A well-structured policy can:
- Provide immediate financial resources to fund your child's care plan.
- Fund a special needs trust without risking government benefits.
- Offer peace of mind that other family members (like siblings) won’t be left solely responsible.
Because life insurance pays a death benefit outside of probate, it can provide fast access to funds without waiting for your estate to settle.
It also allows you to tailor the amount to fit your child’s anticipated lifetime needs.
Choose the right type of life insurance
Not all life insurance is created equal. When planning for a child with disabilities, the two main types you’ll want to understand are:
Term life insurance
Term insurance covers a specific number of years, often 20 or 30. It is typically the most affordable option. However, if you outlive the term, the coverage expires.
Permanent life insurance
Permanent life insurance includes whole life and universal life policies. It remains in force for your entire life as long as premiums are paid. These policies are more expensive but guarantee a payout no matter when you pass away.
Permanent insurance often makes the most sense for parents worried about lifelong care needs. It guarantees that resources will be available even if you live to 95 or beyond.
Why a special needs trust is essential
If you leave money directly to your child, even life insurance proceeds, it could disqualify them from receiving crucial government benefits.
That’s why you should consider naming a special needs trust (SNT) as the beneficiary of your life insurance policy.
A properly drafted SNT can:
- Hold assets for your child’s benefit without jeopardizing SSI or Medicaid.
- Be managed by a trustee you appoint, who uses the funds to enhance your child's life.
- Pay for things like therapy, travel, education, and other quality-of-life expenses.
You can think of the trust as a bridge between your child’s government benefits and a more comfortable, supported life.
How much life insurance do you need?
The amount of coverage you’ll need depends on many factors, including:
- Your child’s expected future living expenses
- Medical and caregiving costs
- Inflation over time
- Whether you have other children to provide for
- Whether you want to leave additional funds for things like vacations or hobbies
Some experts recommend a basic formula as a starting point: estimate your child’s annual support needs, then multiply by the number of years they are expected to need support.
However, every family's situation is different. It's important to work with a professional who can tailor a plan specifically for you.
Coordinate life insurance with your overall financial plan
Buying a life insurance policy isn’t a stand-alone decision. It needs to fit into your broader financial plan, including:
- Your retirement savings
- Other children’s needs
- Your estate plan
- Your child’s eligibility for government programs
- Trustee selection and trust administration plans
It’s often a good idea to revisit your life insurance and special needs plan every few years, especially after major life events like a divorce, a move, or a significant change in your child’s condition.
Common mistakes
Even families with the best intentions sometimes make errors when setting up life insurance for future care. Some of the most common mistakes include:
- Naming the child directly as the beneficiary
- Buying term insurance without a plan to replace it if you outlive the term
- Failing to update beneficiary designations after setting up a special needs trust
- Not coordinating with your estate planning attorney and financial advisor
These mistakes can be costly—and easily avoided with proper guidance.
Other ways to supplement life insurance
While life insurance is a powerful tool, it’s often just one part of the solution.
Some families also consider:
ABLE accounts: These are tax-advantaged savings accounts for individuals with disabilities, allowing savings up to $19,000 per year (as of 2025) without affecting benefits.
Long-term care planning for yourself: Protecting your financial resources with long-term care insurance can prevent unexpected expenses from draining assets you intended for your child's care.
Letters of intent: This is a non-legal document providing future caregivers with critical information about your child’s daily life, medical history, likes, and needs.
Why starting now makes a difference
It’s tempting to put off life insurance planning.
Daily caregiving demands so much energy that thinking about the distant future can feel overwhelming.
But starting sooner rather than later can make a big difference. You’ll likely qualify for lower premiums if you are younger and healthier. And more importantly, you’ll have a plan in place—one less worry weighing on your mind.
Final thoughts
Planning for a child’s lifelong care is one of the most profound responsibilities you’ll ever undertake.
Life insurance won’t replace your love, but it can create the security your child will need when you’re no longer there to provide it yourself.
You don't have to do it alone. A trusted financial advisor experienced in special needs planning can help you design a strategy that honors your child’s needs, your family's values, and your peace of mind.
