Disability, Long-Term Care and Critical Illness insurance

When life happens it can sometimes result in unexpected injuries and prolonged illnesses that can seriously disrupt one’s ability to earn an income or perform normal activities of daily living.  Sound risk management involves assessing one’s ability to cover life’s risks using personal resources versus insuring them before the risk occurs.

For most people, the ability to earn an income is their single largest asset. When you consider that nearly one in three people between the ages of 35 and 65 will suffer a disability that will last at least 90 days, it represents the biggest risk faced by most people today.

As people get older, the chances of a long-term disability or illness increase to the point where one in three seniors over age 65 will require some kind of care provided by a home nurse or a nursing home. After age 75 that risk increases to over one in two.  The cost of nursing home care, averaging $6,500 per month, is such that it could easily consume all or a  part of one’s savings and investments to pay for it.

Limited Government Assistance

Unfortunately, present forms of federal and state-sponsored health care programs do not comprehensively cover and extended disability or long-term care. Social Security has such strict definitions of what it considers a “disability” that few people can qualify.  Medicare generally offers only limited assistance for long-term care needs, and Medicaid eligibility, which varies by state, may require that a person “spend down” most of his assets in order to qualify.

Disability Income Protection

For most people, the only true way to protect against the loss of income due to a disability is through disability income insurance.  While the policies can be expensive, the benefits, which are not taxable, can cover a significant portion of your income.

The two major types of disability insurance are Own Occupation Disability Insurance and Loss of Earning Disability Insurance. Own occupation disability insurance covers the ability of a disabled person to work in his or her own occupation, but may allow work in another job. Loss of earnings disability insurance provides payment for the percentage of income lost due to a disability.

Key Considerations for a Disability Policy

Disability Defined: Perhaps the most important factor to consider is the insurance company’s definition of a disability.  If the definition is too strict, it may deny benefits where other policies, with a more broad definition, would pay.

Waiting Period: This is the period of time that must pass before benefits are paid. The shorter the period, the higher the premium payment will be. Your ability to meet your short-term cash needs should determine the length of the waiting period.

Benefit Period: The length of time selected to receive benefits will also affect the premium.  Benefit periods are available from 24 to 60 months and even lifetime.

In addition, it is important to consider polices that are non-cancellable and that the provisions of the policy cannot be changed as long as premiums are paid.  Look for  polices with inflation protection.

Protect income through disability insurance. Contact us today to find out which policies are best for your unique circumstances.

Long-Term Care Insurance

Anyone who is unable to perform the normal activities of daily living such as walking, eating, bathing, toileting and dressing is likely to need long-term care.  The care provided could be in the form of home health care, nursing home care or assisted living care.

Paying for Long-Term Care

There are several ways that the expenses for long-term care can be paid such as personal savings, a reverse mortgage, a life insurance policy with living benefits, and some health insurance policies with limited coverage. For those people who are concerned with the quality of nursing or home care they receive and who wants to protect their assets, a long-term care insurance policy may be the most viable option.

What to Look for In a Long-Term Care Policy

Qualified Policies: Most insurers offer “qualified” LTC insurance policies that meet federal guidelines for including LTC premium payments in medical expense itemization.

Benefit Payments: There are three ways that LTC benefits can be paid. Indemnity policies pay the selected daily benefit amount. Reimbursement policies pay the actual amount spent or the daily benefit amount, whichever is less. Disability policies pay the full daily benefit whether or not care is provided.

Waiting Period: This is the period during which you must cover the costs of care. It can range from no waiting to 120 days.  The longer the waiting period the lower your premiums will be.

Home Care: Most policies offer this as a rider for those who would prefer to receive care in their home.

Inflation Protection: Nursing and home care costs have been known to increase faster than the rate of inflation. An inflation protection rider could ensure that your coverage increases to help keep pace with inflation.

There are many LTC policies on the market today and there is no one policy that is perfect. It would be important to consult with a financial professional to weigh the costs and features of different policies in order to select one that best meets your needs.

Critical Illness Insurance

Suffering a critical illness is a distressing event. Help ease the burden through a type of insurance that will reduce financial stresses. By helping pay for the additional expenses often associated with a critical illness or condition, insurance offers individuals, families and if applicable, businesses, added financial resources —so the focus remains on recovery.

The advantages of critical illness insurance can include:

  • Coverage encompassing a wide range of screening tests
  • An initial lump-sum benefit of up to $500,000 that policy-holders can use however they wish—from making mortgage payments to home health care
  • Employers or organizations can add value to benefit packages at an affordable cost
  • Critical illness insurance pays a cash benefit if the policy-holder makes a full recovery

Contact us today to determine whether disability, long-term care, or critical illness insurance fits into your financial needs.

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Cetera is not affiliated with any other named entity.

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