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Health Works Collective > News > Buying a House to Help a Disabled Child with Death Benefits
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Buying a House to Help a Disabled Child with Death Benefits

Diana Hope
Diana Hope
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6 Min Read
use life insurance to buy a home for a child with a disability
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Over 3 million children in the United States have disabilities. This can be a challenge for parents trying to take care of them.

Contents
  • Can You Use Life Insurance Benefits to Buy a Home for a Child with Disability?
    • What Is Life Insurance?
  • Purchasing a Home for a Disabled Child with a Death Benefit
  • Using a Life Insurance Benefit to Purchase a Home While Living
  • You Can Use Death Benefits to Buy a Home to Take Care of a Disabled Child

Are you trying to take care of a child suffering from a disability? You might have recently found out that your child has autism, which requires certain accommodations. You might need to purchase a home that has been specially built to accommodate them. Unfortunately, these types of homes don’t usually come cheap.

The good news is that there are ways to pay for the purchase. One option is to consider using death benefits after a spouse or other loved one has passed away. But is this a feasible idea? Can you use death benefits to purchase a house? Will the amount be enough to purchase one that is designed to take care of a child with a disability?

Keep reading to learn more.

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Can You Use Life Insurance Benefits to Buy a Home for a Child with Disability?

Life insurance is a key component of any financial plan. While some policy types allow you to access the benefits while you’re alive, like borrowing against the cash value on a permanent life insurance policy, the primary benefit comes once you pass away. Once the policy’s death benefit has been paid, your beneficiaries can use the funds from the policy however they see fit, including buying a home!

What Is Life Insurance?

So, what is life insurance? Like other types of insurance, life insurance requires a person to pay a premium to maintain a policy. A life insurance policy protects the policyholder in that when they die, beneficiaries listed on the plan will receive a payout, typically a lump sum, to be used as needed. Popular uses for life insurance benefits include:

  • Childcare
  • Mortgage payoff
  • College savings
  • Car payments
  • Medical expenses
  • Funeral costs
  • Debt payoff (credit card, loans)
  • Tax purposes

Purchasing a Home for a Disabled Child with a Death Benefit

You are probably still mourning the loss of your loved one that passed away. Unfortunately, you still have to think about the problems that are facing the living. This includes your children that still have disabilities. It doesn’t help to wonder why so many people have disabilities. The fact is that they do and need help

In the event of your death, the life insurance company will release the benefit amount to your listed beneficiaries or a trust. From there, the money can be used according to your wishes or simply be given to your chosen beneficiaries.

One of the primary draws of investing in life insurance is that the payout can be used in any way without restrictions. That means your beneficiaries can use their funds to buy a home if they choose to do it.

While a life insurance policy, especially divided amongst multiple beneficiaries, may not be able to pay for an entire home, the funds can certainly contribute toward a down payment and be reserved for closing costs.

Using a Life Insurance Benefit to Purchase a Home While Living

Some life insurance policy types offer benefits to policyholders while they’re still alive. In the case of a whole policy, a cash value component continues to build as the policy is maintained and interest grows on the investment.

In these cases, you may be able to borrow against that cash value to fund purchases while living. While it can seem like a dream come true to access those funds as needed, especially when purchasing a home, the value of your policy will deplete over time if you borrow against it.

So, in this case, while the death benefit isn’t directly being paid out, the policy continues to contribute value to you while you’re alive.

You Can Use Death Benefits to Buy a Home to Take Care of a Disabled Child

Life insurance provides immeasurable benefits for you and your beneficiaries. You might be able to use it to buy a home to take care of your disabled child. This can be a much better alternative to sending them to a youth nursing home.

A policy is an important part of a robust financial plan that can help in times of need while living and after your passing. Sometimes, a life insurance death benefit can be used to help purchase a home, while other situations warrant borrowing against the policy while still alive. Regardless, be sure to choose a policy that fits both your current and long-term needs.

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