What is the Difference Between Disability Insurance and Long-Term Care Insurance? Understanding your possible need for medical care as you age can help you maximize your independence and functioning at a time when you may not be fully self-sufficient due to a sudden illness, chronic condition, or accident. According to the U.S. Department of Health and Human Services, planning is important. Statistics suggest there is a good chance you will need some type of support or assistance if you live beyond the age of 65. There is a lot of confusion about the differences between two of the most important types of coverage you can buy: Long-Term Care insurance and Disability insurance. By understanding the differences between the two, you can make more informed decisions about the degree and nature of the insurance protection you need. Here are details about the benefits and advantages of each: Long-Term Care Insurance helps cover the costs of health care services provided in your home, a nursing home, a rehabilitation center, or an assisted living facility. It provides a range of services, and supports people in meeting their health and personal needs over an extended period. Most policies pay policyholders for assistance with daily living activities such as eating, bathing, dressing, and walking. Some experts maintain that long-term care insurance is the most important insurance you can buy. It can also be among the most costly. The basis of their argument is that the incredible advances in medical care have now transformed many once deadly diseases into disabling afflictions. Consequently, such advancements can mean long periods of incapacitation for surviving patients. Many people think that Medicare and Medicaid cover long-term care, but unfortunately, that is not the case. Medicare pays only for care at home for a short period, or for a limited stay in a nursing home after a hospitalization. While Medicaid indeed does pay for long-term care, it does so only after people have already exhausted the majority of their savings and financial assets. You can purchase long-term care insurance at any time, but premiums are typically lower if you buy a policy at a younger age. Consider looking for a policy while you are still in your 50s if possible. Should you wait until you are in your 60s and have existing health problems, you may have difficulty finding a policy at any price. Long-Term Disability Insurance provides you with a regular monthly benefit in the event you are injured, unable to work, or forced to find a lower-paying job due to your disability. The benefit you receive continues every month until you are well enough to return to work or deplete your benefit reserves. Though some short-term policies provide coverage on a temporary basis, usually up to several months while you recover from an accident or illness, most policies provide benefits when a disability is of a more permanent nature. It is important to remember that most long-term disability policies are of the “any-occupation” variety. This means that the policy owners must work if they are capable–even if not in the same capacity. Some disability policies are the “own-occupation” type, which allows the policyholder to collect benefits until he or she can resume their previous occupation. Both “guaranteed renewable” and “non-cancelable” policies are available. Guaranteed renewable means the insurance company cannot terminate your policy unless you miss a premium payment. Non-cancelable means the insurance company agrees never to raise the premium of the policy. Why do many financial experts recommend their clients purchase both disability and long-term care insurance? According to the Social Security Administration, a 20-something worker today has a 30% chance of becoming seriously disabled before reaching retirement.(1) The average charge for a semi-private room at a nursing home is $225. The average monthly charge for care in an assisted living facility is $3,293. Take steps to protect your income, your assets, and your lifestyle.
Posted on: Tue, 14 Oct 2014 00:24:48 +0000
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