June 18, 2023


Liz Yoder, CFP®

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Insurance Is Not A Financial Plan, Including for Families With Special Needs

I recently spoke with a colleague who is exploring getting more into Special Needs Planning because of her experiences with financial advisors who spoke with her about her family’s needs. Whenever she went through the process of sharing her information with an advisor, the first piece of advice was getting a Whole Life Insurance Policy. And she could do that right now because the advisor was also a life insurance agent and could get a policy together immediately.

To some advisors, that is all they know to offer when a family has a dependent child with a disability. Disability is a small section of our Certified Financial Planning education coursework and sits within the insurance section. The wisdom is that if you know your family member will depend on your savings during your working life and beyond your lifetime for their care and support, fund the need with life insurance. It is a solution to a problem.

But it is not a complete story by any stretch of the imagination.

Can you afford insurance? Have you calculated what the actual financial need will be? Do other forms of inheritance planning achieve that need.? And what life policy is the right fit for your family’s needs.

There is another section of the insurance section in the Certified Financial Planning education coursework on Government Insurance. This is the SSI and SSDI, Medicaid and Medicare section people in the United States have to look forward to. But very few advisors have more than a glance at those financial planning elements. A specialist is important to get the real story of what is needed.

At Dependent Financial Planning, we don’t look at life insurance as a question starting with “How much can you afford?” We review everything else first. Who is the loved one you are supporting? What Social Security benefits will they receive or receive during their lifetime? What is the lifestyle they will live in their adulthood? What supports are available through the Medicaid programming of your state or jurisdiction? What assets are already coming to them outside of life insurance proceeds?

As part of this conversation, we then review what your financial life is like. What is your lifestyle now and in retirement? Are you a younger family still working on having enough or already retired? How are you investing for yourself and your dependent loved one? What do those projections look like when you continue to invest that way? Are the assets you’ve saved primarily in retirement accounts, or is there diversification to your savings? What are your estate plans? Do you have multiple children you want to support beyond your dependent family member? Finally, are you doing what you can to protect assets that you plan to leave to your loved one from unnecessary taxes?

These questions generate a plan. Not just an insurance recommendation but a full plan that can help guide you through Social Security filing, employment, savings strategies, investment allocation efficiencies, and more.

At Dependent Financial Planning, our financial advisors are fee-only planners. We have referral partners that write life insurance and insurance policies because we do not want that to be your first conversation when you speak to us.

For many families with dependent children, life insurance is an important tool to ensure the life you planned with them can also be had when you are gone. When your dependent child has a disability, it can be a way to protect both your peace of mind and your overall financial plan. But it has to be done within the context of your lived life. It is just one tool available to you in your financial life.

If you are tired of reaching out to financial professionals who seem only to want to sell you a product, contact Dependent Financial Planning. We specialize in making sure families can talk about their unique life and find pathways to being more comfortable with what the future holds for their dependent family members.

Contact our financial advisors specializing in special needs families.

Contact Our Special Needs Certified Financial PlannersTM