Survivorship Insurance can help cover costs of children with special needs

Raising your son or daughter with special needs is expensive. Some experts estimate that merely from birth to age 18, the total expense can be four times that of raising a child without a permanent disability.

And those higher costs can be difficult for parents to manage, especially when trying to figure out how to ensure care for their child long after they are gone.

One strategy available is setting up a special needs trust and funding it with survivorship insurance.

There can be quite a few benefits in having survivorship insurance for families with special needs children.

First, because survivorship insurance doesn’t pay out until after the death of the second spouse, the premium rates are typically cheaper. And, because parents typically play a role in their adult child’s care until they have passed, this can help provide peace of mind to them that adequate funding will be available to their son or daughter after their death.

Let’s look at some estimated costs of these types of polices. We have asked ValMark Securities, Inc. to provide several illustrations. Below is a summary of “best case scenarios”, per $100,000 of coverage for a resident of Wisconsin:

“Best Case Scenario” premiums per unit ($100,000) of coverage*

Standard nonsmoker premium

Preferred nonsmoker premium

Age 40



Age 50



Age 60



Curious about how these policies fare from a return on investment perspective?

 Under the assumption that the couple passed away at standard life expectancies (published by the Center for Disease Control in 2017), these policies would result in the following tax-free investment returns, given the policies are purchased at the ages shown above:

Policy Internal Rates of return** if second death occurs at standard life expectancy


Standard nonsmoker return

Preferred nonsmoker return

Age 40 (83)



Age 50 (83)



Age 60 (85)



If you do plan to use survivorship insurance, the beneficiary designations are very important.

Much like your IRAs or 401(k)s, the amounts you plan to leave for your son or daughter with special needs should be explicitly covered in the beneficiary designation of the policy.

It’s essential to reach out to an attorney who specializes in special needs planning to make sure your legal documents are in order and to help you navigate the complexities.

You should call out an exact percentage of the death benefit to pay to the special needs trust of which your child is the beneficiary. But be careful, you should use the exact titling of the trust that is provided to you by the drafting attorney.

This prevents any unneeded complications after parents have passed, and the insurance company is writing the check that will be deposited in the trust account. In addition to consulting an attorney, you should also explore the myriad federal, state and local resources available to your child. Your local Aging and Disability Resource Center can be a great place to start and get more information about Social Security benefits, care support and more.

You can also keep reading on about financially caring for children with special needs in these related blogs:

Looking to Create an ABLE Account? These Are the Resources You Need

How Special Needs Trusts and ABLE Accounts Work Together

Have more questions? Reach out.

Contact Ryan

How survivorship insurance can help cover costs of special needs children

Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
OneBite Editorial Staff

OneBite® is a Top 50 Financial Advisor Blog powered by Wipfli Financial Advisors. Founded in 2011, the digital magazine is dedicated to providing intelligent, in-depth coverage and analysis of the top financial and economic issues facing investors today.

No Comments Yet

Comments are closed

Survivorship Insurance can help cover costs of children with special needs

time to read: 2 min