Special Insurance Considerations for Dependents

Children and spouses are just one group of dependents who may require cash proceeds from a life insurance policy. Age of and financial dependency of family members are what you should consider, when deciding on how much life insurance to obtain.

Distant relatives, ex-in-laws, foster children, and child support for any illegitimate children may also require additional streams of cash.

Another thing to remember is that if you or your spouse should die, your parents may also need institutional or nursing home care down the road.

The average cost of an elderly individual to live in a nursing home is $200 per day. This can equal $73,000 a year. Life insurance offers a great way to supplement resources needed to care for elderly parents.

One way to accomplish this is through attaching a long-term care rider to a permanent life insurance policy.

“You can combine the features of a long-term care policy into a cash value accumulating life insurance policy to ensure no dollar is wasted,” said Marc Belletsky, Director of Estate and Business Planning at The Hartford. “The death benefit will take care of your beneficiaries and provide you with additional funds for the possible long-term care of a parent.”

He adds that this can help to cover expenses for adult children who are taking care of their parents at home.

When deciding on how much life insurance your family needs, there are several things you should consider:

  • The number of beneficiaries covered by your policy
  • Will your beneficiaries need full or partial support?
  • How long will the payments last?

An insurance agent would be the best source to determine which plan fits the needs of your dependents. JD Power also has tips to consider when trying to decide who you should choose as beneficiaries.

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