Protecting Your Future: Disability & LTC Insurance

Understanding Disability Insurance

Before Purchasing Disability Insurance

• Review your employer’s plan.
• Determine if your union or professional organization pays disability benefits.

How Much Disability Coverage Do You Need?

Estimated required disability payments can be calculated as:

(Total monthly expenses × 120%) – (Non-wage reliable household income)

Group vs. Individual Disability Plans

• Group disability rates are not always the most economical because higher-risk and lower-risk individuals are grouped together in the plan.
• Lower-risk individuals can benefit from an individual plan because they may receive a lower premium.
• Higher-risk individuals may be able to obtain coverage through a group plan that they could not obtain with an individual plan.

Navigating Long-Term Care (LTC) Insurance

What is Long-Term Care (LTC) Insurance?

LTC insurance is designed to cover substantial expenses involved in the extended care of individuals who have difficulty with basic functions such as eating, bathing, or dressing.

Societal Changes and LTC Need

Historically, there was less need for long-term care.

Benefits of LTC Insurance

LTC insurance augments your regular health insurance.

Key Roles in Long-Term Care

• Primary Caregiver: The person who attends to all of the recipient’s medical needs.
• Home Health Aide: Someone hired to help the recipient bathe and dress, change the bed, and perform other housekeeping tasks.

Triggering Long-Term Care Benefits

• Physical Impairment: Not being able to perform without assistance two, or sometimes three, of the six basic activities of daily living (ADLs).
• Cognitive Impairment: A loss of mental capacity that requires substantial supervision to maintain your safety and the safety of others.

Levels of Long-Term Care

• Skilled care
• Intermediate care
• Custodial Care (personal care): Assistance with activities of daily living, other services, licensed or certified providers.

Paying Long-Term Care Benefits

• Indemnity Policies (per diem policies): A policy that specifies daily coverage amounts for various kinds of care.
  • Daily Maximums: A predetermined maximum amount of daily expenditure associated with specific care.
  • Integrated Policy (pooled policy): Specifies a total dollar amount that may be spent on specified types of long-term care.

Inflation Protection for LTC Policies

Long-term care costs can double in 10 or 12 years.

Policies that offer inflation protection using compound interest are better than policies that offer simple interest.

• Although premium costs will rise by as much as 50 percent, compound interest protection is the most effective way to address the problem of spiraling costs.

LTC Policy Limitations and Exclusions

Common limitations and exclusions include:

• Calculating the elimination period
• Pre-existing conditions
• Family care
• Other insurance coverage
• Prior stay restrictions
• Alcoholism or drug addiction