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Parents Lack Plan to Care for Special Needs’ Kids

April 21 2009 | by

The nation’s 2.6 million children with special needs will need costly care long after their parents have passed away, but the majority of parents are not prepared, according to new research sponsored by life insurer Hartford Financial Services Group.

Hartford found that three in five parents of children with special needs who were surveyed have no plan to cover the cost of caring for their child when they no longer are able to do so. And those that do have a plan often make mistakes that may disqualify their child for government services on which they now depend.

Hartford’s Special Needs Survey was conducted by research firm Harris Interactive, which polled 580 parents of children with special needs. Nearly one-quarter of parents surveyed said they spend at least $500 a month to address their child’s special needs. Though 60 percent of parents believe these costs will continue into adulthood, less than half have a plan in place to cover the costs.

“When you consider the daily demands already being put on the parents of a special needs child, no one should be surprised that they have not taken time to create a plan for their child’s future,” said Donna Scalaro, a director in estate and business planning for Hartford’s Individual Life business.

The most common strategy used to cover the anticipated cost of care was life insurance, according to the research. Among those with a life insurance policy, more than half of the parents said they did not know that, during the child’s lifetime, they may access the accumulated cash value in a permanent policy to cover some of the cost of their child’s special needs.

Even parents with a plan for their child made costly mistakes. Half of all parents of children with special needs plan to leave money directly to their child and even more name their child as a beneficiary, either of which could possibly disqualify the child for critical government benefits and services. In addition, only a quarter of the parents have established a special-needs trust to provide for supplemental needs and expenses of the child.

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