Understanding Disability and Long Term Care Insurance Policies
Insurance , like , is used to protect future - disability will replace your in the that you become physically unable to . Although it gets less attention than life insurance, agree that disability is at least as important.
While most are prepared for the medical of severe or sickness (through ), without disability insurance, they are not prepared for the of that accompanies such a tragedy.
Disability Insurance PoliciesMany employers disability insurance for their ; however, the plans vary greatly, and some may not offer . Furthermore, any disability payouts from an employer's are , while payouts from are not. Individual disability coverage is generally much more expensive than disability coverage; nevertheless, you should any policies your employer has taken out, and consider individual coverage if the policy is insufficient.
Disability insurance comes in two : and .
- Short-term disability - This coverage replaces a portion of lost in the event the policy misses six or less of work. The coverage typically begins after all sick leave is exhausted, and replaces close to 100% of wages for the first payouts. If the policy owner remains unable to work, however, the will eventually , often to 60% of wages. The length of coverage and vary from to plan, but these numbers are .
- Long-term disability - Some experts contend that long-term disability insurance is the most important insurance you can . This can be partially attributed to in medical ; some diseases and injuries are now disabling rather than deadly, meaning that the incapacitation can be lengthy.
Long-term disability policies vary in the length of : some policies will only pay out for 5 or 10 years, some will pay out until age 65. Experts recommend the latter. Policies also vary in definition of disability (some contentious categories include mental illness and back injuries) and exclusionary (pre-existing medical , injuries from dangerous , etc.).
Policies can be 'guaranteed renewable' and 'non-cancelable.'
- the insurance company cannot drop the policy, unless payments are skipped.
- Non-cancelable means the insurance company can never the premium on the policy. Both are desirable, but non-cancelable is usually best.
- The provides the difference between old and new , in the event that the policy owner can get a new job, but not one with the same salary as his old one.
- The allows the policy's value to increase with .
Social Securityis not a or surrogate for disability insurance; at the most, it should be a resort for those who can't get coverage. Not everyone is eligible for Social benefits, even once disabled - the must have significant work history, must have been unable to work for a year or more, and must not be to work in any capacity.
Long Term Care InsuranceSpending a long time in a nursing home, or under home care, is not something people like to think about; nevertheless, as medical increases the , a growing number of are finding themselves unable to live independently. At the same time, extended nursing home and home care is becoming extremely expensive, primarily due to rising medical costs. these , and is something people in their late 50s to 60s should seriously consider purchasing.
Long-term care policies generally extended health care at home, nursing homes, or assisted-living . However, policies do not necessarily pay out in the same amounts for each of these ; most notably, policies tend to pay less for home care. Like long-term disability coverage, policies also vary in their eligibility criteria; in this case, the determination of when someone can no longer live independently. Experts say an ideal plan's eligibility criteria includes and inability to perform one or more activities of living, and does not require previous hospitalization or home care.
Policies vary in their length of payout, from a couple years to "lifetime." Obviously a lifetime policy higher premiums, but not much higher - the typical nursing home lasts less than 3 years, meaning the of a lifetime policy to the is not that much greater than a 2 or 3-year policy. Policies have a set of time between when care starts and when the benefits take effect (analogous to a in other types of insurance coverage). The longer the is, the lower the premiums.
Finally, like long-term disability, long-term care policies can be "guaranteed renewable", meaning the insurance company can not drop the policy. Most experts recommend a policy that is guaranteed .