The investment decisions which people must make for the lifetime's care of a child with a disability are not unlike those they should make for their own lives.
Protection policies are needed to cover the intervening years before pension provisions kick in and shorter-term savings are used for shorter-term needs.
Life insurance and pensions take on a special urgency though: whereas most children grow up and become independent and spouses age along side you, the protection policies you take out if you have a disabled child need to last during your lifetime and theirs. New life products on the market can now provide considerable emotional comfort for a parent who is worried about money running out after their death. "Guaranteed life policies, offered by Hibernian Life and Irish Progressive are a very good option in cases like this," says the fee-based independent financial adviser, Mr John Gilmartin of Gunn Robinson O'Higgins. "Unlike conventional life insurance policies which last for a certain length of time, say 15 or 20 years, after which renewing the cover will be much more expensive, these last for your entire life and the premium does not change." A £100,000 joint life policy, which pays out the benefit after the second death, will cost just under £47 a month from Hibernian for a couple aged 40 and 38, says Mr Gilmartin. "If the couple wanted the benefit to be paid on both lives, it would cost a little under £88 a month." This compares well against a 40-year term policy from a leading assurer which pays the same benefit, but costs £65 a month for second life benefit only or £102.60 for joint life benefit (ie. £100,000 at each death).
Priority number two is adequate pension provision for both a dependant spouse and child during their lifetimes. If you belong to a defined benefit pension scheme at work, there should be no difficulty arranging, upon retirement, for pension provision for your child after your death. But if you know that your occupational pension is going to fall below the maximum benefit (because you joined the scheme late, for example) or if you are self-employed, you'll need to take expert advice to ensure that you choose a good pension provider and that you fund it to the maximum allowable under Revenue rules.
Upon retirement you'll be able to convert 25 per cent of the fund into a tax-free lump sum, which can either be spent in the conventional way to pay off a mortgage or other debts or to reinvest for your dependant child.
"Safe investment options, in which the capital is secured as well as possible, include fixed interest guaranteed bonds and government gilts," says Mr Gilmartin. It is important, he says, that any trustees are aware of these investments and how they work.
"I know it's a cliche, but money is the root of all evil and it can split families. A trust fund needs to work properly and to be seen to work by other members of the family."
