Dave Says: Severely Ill Foster Child Needs

Dear Dave,
My husband and I have adopted a foster child who is severely ill and will always be in need of care. We love her to death and don’t want our older children to feel that they’re financially responsible for her when we’re not around. We heard about an insurance plan that doesn’t pay until the parents die, but what do you think?
-- Laurie

Dear Laurie,
A special needs trust is a great plan. I’d go with term life insurance until I had enough cash built up to fund the trust with a mutual fund.

Term insurance is very inexpensive. The plan you’re talking about is a second-to-die plan, which usually ties you into some kind of cash value program. Whatever you do, stay away from cash value insurance like it’s a rabid dog. It’s a bad product.

You’re great parents for looking at the future and making sure you provide for this special little girl.
-- Dave