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Introduction to disability and long-term care insurance

In today's uncertain world, understanding disability and long-term care insurance can provide peace of mind and financial protection when life takes unexpected turns, ensuring you and your loved ones receive the care and support needed during challenging times.

Disability and long-term care insurance

Have you ever thought about what would happen if you got injured or sick and couldn't work for a long time? How would you pay your bills and take care of yourself or your family? That's where disability insurance and long-term care insurance come in. These types of insurance can help replace your income and pay for care if you can't work or take care of yourself because of a disability or a chronic illness.

Differences

Disability insurance

Disability insurance helps replace your income if you can't work because of an injury or illness. This insurance pays you a percentage of your salary, usually between 50% and 70%, until you can go back to work or for a certain period of time.

Long-term care insurance

Long-term care insurance, on the other hand, helps pay for care if you have a chronic illness or disability that makes it hard for you to take care of yourself. This includes things like nursing home care, home health care, and adult day care.

Importance

Becoming disabled or needing long-term care can be scary and expensive. It can also have a big emotional and financial impact on you and your family. Disability and long-term care insurance help protect you and your loved ones from these costs and risks.

Disability risk

The chances of becoming disabled or needing long-term care are higher than you might think. In fact, about 1 in 4 young adults will become disabled before they retire.1 And, 70% of people over age 65 will need some type of long-term care in their lifetime.2
Becoming disabled or needing long-term care can be expensive and emotionally challenging for you and your family. Medical bills can add up quickly, and you may need to pay for things like home modifications, therapy, or caregiving services. Your family might also need to help take care of you, which can cause stress and financial strain.

Limitations of support

You might think that Social Security, Medicare, Medicaid, or your family could help cover the costs if you become disabled or need long-term care. But these sources often have limitations and may not cover everything you need.
For example, Social Security only provides disability benefits if your disability is expected to last at least a year or result in death. Medicare only covers certain types of long-term care, and Medicaid usually only helps those with very low incomes. Relying on your family for care can also be difficult, as they may not have the time, resources, or skills to provide the care you need.

Costs and Benefits

The cost of these insurance policies can vary significantly based on factors such as your age, overall health, and the extent of coverage you select. Some policies may have high premiums, but they may offer more comprehensive coverage. Others may have lower premiums, but they may have more restrictions on the types of care they will cover. It's important to compare different policies and understand the costs and benefits of each one.
The good news is that a large number of employers offer disability insurance that you can purchase through your paycheck deductions, and some employers even pay for it fully - all you need to do is enroll. It is definitely worth checking with your employer if they help pay for some, or all of the premiums.
One big benefit of having disability and long-term care insurance is peace of mind. You might be thinking, "I'm young and healthy, so I don't need to worry about this stuff." But accidents and illnesses can happen to anyone, at any age. Having insurance means you'll be better prepared if something happens to you.

Insurance scenarios

To help you understand how these insurances work, let's look at these two scenarios:

Scenario 1: Long-term care insurance

Sophie is in her early 30s and she just had a stroke. After being hospitalized and going through rehabilitation, she still needs help doing everyday things like bathing, dressing, and eating. Sophie's long-term care insurance will help pay for a caregiver to come to her house and take care of her while she recovers.

Scenario 2: Disability insurance

Jose is a construction worker who was recently in a car accident. He had to have surgery on his back and is unable to work for several months. Luckily, Jose has disability insurance. This insurance will send him a check every month he's unable to work, so he can still pay his bills and take care of his family.

Personal considerations

That's a question you'll have to answer for yourself. Think about your own situation, your health, and your family. If you decide that you want to be prepared for the unexpected, these types of insurance could be a good investment.
Remember, the best time to get insurance is when you're young and healthy. The longer you wait, the more expensive your premiums might be. So, if you think disability and long-term care insurance might be right for you, it's a good idea to start looking into your options now.

Want to join the conversation?

  • blobby green style avatar for user jennbchen
    "Remember, the best time to get insurance is when you're young and healthy. The longer you wait, the more expensive your premiums might be."

    Wouldn't insurance companies raise your premium regardless as you get older even if you enrolled at a young age?
    (9 votes)
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    • aqualine tree style avatar for user David Alexander
      Disability and Long-term care insurance rates are based on the possibility that, when you first get a policy, you are healthy and not needing anything. The insurance company plans that you will be paying into the company for a number of years before you'll make any claims. So, if you get long-term care insurance at age 20, and won't likely make any claims until you are 70, then the insurance company collects from you for 50 years before it has to pay anything out. However, If you get that insurance at age 50, the company only collects from you for 20 years, so will likely be charging more. The premium is set at the time you take out the policy based on the insurance company's "bet" that you'll live long, pay into the company for many years, and die swiftly, so that they don't have to pay out very much for your long-term care.
      (11 votes)
  • aqualine ultimate style avatar for user Isaiah Smith
    Is disability insurance the best option, in the scenario of being chronically ill for a certain period of time?
    IS disability insurance better for a young adult in a large work environment where accidents can happen more often than usual?
    (3 votes)
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    • sneak peak blue style avatar for user Micah G. Treggi
      It depends on what illness is covered in the specific disability plan you want, if you have cerebral palsy and you cannot work, disability would be a good option but if you have anxiety or something fairly small it may be better to save the money.

      Yes. Just simply yes. If you get injured you could potentially be out of commission for weeks to months without income so you would have not income without disability insurance.

      Happy Learning!
      (2 votes)
  • purple pi teal style avatar for user Albert L
    How long can you receive disability pay?
    (3 votes)
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  • aqualine ultimate style avatar for user XavierH
    Which of the following might increase the cost of disability and long-term care insurance?
    (0 votes)
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  • blobby green style avatar for user lol
    So basically premium is the cost of the insurance we have to pay every month
    Just like how we pay interests in bank??
    (1 vote)
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  • leaf red style avatar for user Christian Mango
    You are awesome David.
    (1 vote)
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  • orange juice squid orange style avatar for user Sammy Apsel
    what happens if you have a disability and long term care insurance through your employer, and say you had an accident and cant work for 6 months and need long term care of say 18 months, which are all covered by the insurance. But suppose now, that after 2 months your employer decides to fire you. what happens then?
    (0 votes)
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    • aqualine tree style avatar for user David Alexander
      I would think that you would have a case to take to court.
      Since you began drawing on the insurance payout while still an employee in good standing, that was part of your contract with the employer, and the 6-month and 18-month issues are part of the employer's contract with the insurance company.

      Since you have supposed this entire scenario, I am going to suppose that you can file a complaint with the court in the jurisdiction where you reside.

      To do that, you might have to hire a lawyer.
      (2 votes)
  • blobby green style avatar for user sc299801
    Can't you still get good dissabilty checks and work part time or no?
    (0 votes)
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