Five Must-Have Insurance Policies When You Have a Child with Special Needs

While all parents should have comprehensive insurance coverage to protect against unexpected setbacks, when you have a child with special needs, the need for that protection becomes even more important.

In addition to health insurance, which will be covered in depth in a future article, there are five areas of insurance coverage that are critical to protecting your family when raising a child with special needs:

1.  Disability Insurance

Most Americans greatly underestimate their chances of becoming disabled, but statistics show that one in eight workers will become disabled for five years or more during their working years.[1] To ensure your family would have adequate financial resources to cover your child’s care if either parent developed a temporary or permanent  disability, it’s critical to make sure the wage earners in your household have long-term disability insurance coverage.

Certain insurance issuers also offer private disability coverage for stay-at-home parents. According to Ross Karp, CLTC, founder of 3P Insurance Services, this coverage may be based on household income, but is restricted in its maximum payout.

2.  Life Insurance

You may have already considered how your family would manage without you and have bought term life insurance in case anything led to your premature death. However, the value of that policy may need to be increased to account for the higher expenses and longer term of support necessary to provide for the care of a child with special needs.

If one parent stays at home to care for your child, the death of the income-earning parent can be particularly devastating to the family’s financial situation, so it’s important to have a substantial life insurance policy in place for that parent.  However, life insurance for the caregiving parent is also important.  Many families underestimate the financial cost of hiring a person (and often more than one person) to perform the domestic work and caregiving duties of the stay-at-home parent.

Whatever happens, remember not to name your child as the beneficiary of this life insurance, as it would disqualify him from being eligible for government benefits.

3.  Social Security Insurance

Although many Americans consider Social Security to be either a benefit or an entitlement, it is more properly regarded as an insurance system run by the government. Having a child with special needs makes it particularly important for you or your partner to be fully insured for Social Security benefits.

While your child may be eligible for Supplemental Security Income (SSI) as an adult due to his disability, he may be eligible for an increased benefit as an adult dependent child when you or your partner eventually receives Social Security benefits. These sums add up over a lifetime and ought to be factored in when considering available future benefits for your child.

Therefore, it’s important to know whether you’re paying into Social Security or, because of your employer and the state you live in, you are not fully insured for coverage. Despite uncertainty regarding the Social Security Administration’s ability to maintain its current level of coverage, it is important not to risk losing out on this invaluable safety net.

4.  Coverage for your child’s attendant

Whether or not you’re working outside the home, you may decide to hire an attendant to assist with your child’s physical or medical needs. These individuals can go by a number of titles–personal care attendant, home care attendant, home health aide—but regardless of job title, you may need to get worker’s compensation insurance for this worker, depending on the state you live in and whether you hire them directly or through an agency.

You can often get worker’s compensation coverage through a rider or endorsement on your homeowners’ insurance policy. You may also need to pay Social Security and unemployment taxes (FICA and FUTA, respectively) for the child’s attendant.

5.  Long-Term Care

Finally, though it may seem many years away, you should look into getting Long-Term Care Insurance for yourself when you’re 52-64 years old. Though it’s difficult to consider our own infirmity, the fact is that many parents rely on their children to help them when they become older, and this may not be an option for those whose children already have a medical condition of their own.


Contemplating all the causes for uncertainty may make you anxious, despite or because of the impossibility of removing all uncertainty from your life. What you can do, however, is transfer some of the risk of negative events by getting insurance and minimizing their financial impact. Even in the best of circumstances, doing so makes both psychological and financial sense.

For individualize guidance for your own family, consult a financial professional who is bound by a fiduciary standard or an independent insurance broker who can compare rates among various insurers and is not bound to sell the products of any one insurance company. Then allow yourself to focus on what really matters: your family.

About the Author

Yulia Steshenko

Yulia Steshenko, a CFP® certificant in New York City, specializes in disability planning. Having developed multiple sclerosis at the age of fourteen, she learned firsthand how to navigate government, community and non-profit resources available to those with disabilities. Since graduating summa cum laude from Harvard College with a bachelor’s degree in psychology, she has devoted herself to helping empower those in underserved communities through pro bono work and financial literacy programs.

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