DISABILITY INCOME / LONG TERM CARE
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Disability Income Insurance Quote Form
Long Term Care Quote Form
Disability Income Insurance Information
Disability insurance can replace a portion of the salary you were making before you became disabled and unable to work after a serious injury or illness. But before you seek coverage, you should first understand the different types of disability definitions used by insurers.
Definitions of Disability
Different policies offer many characteristics and definitions for disability including:
Any Occupation: This is the strictest definition in which the insured is considered disabled only if he or she is unable to perform any duties pertaining to any occupation.
Modified Any Occupation: Disability applies only if you are unable to perform any duties pertaining to any occupation for which you have been trained, received education or have work experience.
Own Occupation: This is the most flexible definition for liability. You are deemed to be disabled if you are unable to engage in the principal duties of your own occupation.
Split Definition: This definition can be within one's own occupation for a specific time period or with any occupation after the maximum benefit period has passed.
The Impact of Disability Definitions
How your disability policy defines disability will influence many things including:
- When you are eligible to receive benefits
- How much the policy will cost - the stricter the definition, the higher the cost
- How long the benefits will last
You can obtain disability coverage on your own or through your employer. Many of these policies have dual definitions of disability and others have restrictive provisions. Most group policies offered through work usually end after you leave your employer, or may only pay benefits for a specific amount of time or have caps on the amount of monthly benefits you can receive (ie. max of $5,000 per month). If the employer pays the premium, the benefits are taxable income to the employee. If the employee pays the premium, then the benefits are tax free.
Disability insurance providers rate their premiums based on your job and the level of risk involved in doing that job. Moreover, certain risky careers - skydiving or deep-sea diving instructors, etc. - may not even qualify for coverage.
Other factors to consider when obtaining coverage include:
Elimination Periods: This is the amount of time you have to wait before benefits are paid after your disability begins - the longer the elimination period, the lower the premiums.
Disability Insurance Riders: As with any type of insurance you can add additional features to your coverage for an additional premium. These may include:
- Guaranteed Insurability:
- Retroactive Injury Benefit
- Residual Disability
- Cost of Living adjustments (COLA.)
- Activities of Daily Life
- Return of Premium
- Family Accident
Long Term Care Information
As our lifespans are extended, our family structures change and medical care improves, the need for long-term care will continue to increase. A great number of people over 65 will spend some time in a nursing home, assisted living or extended care facility. The cost of such care can quickly erode the assets of even the most well-prepared savers. The risk of outliving your money in this situation can be great, and one of the best ways to transfer this risk is to purchase long term care.
Long-term care (LTC) is defined as a need for assistance with some of the activities of daily living (often called ADLs). ADLs include functions that most of us perform each day, like eating, bathing, using the bathroom, dressing, transferring and maintaining continence. The need for assistance may be due to physical inability or mental impairment, such as memory loss, Alzheimer's or dementia.
The reason to buy long term care insurance is to protect your assets in case you need to pay for assisted living, home care or a nursing home stay. Long-term care insurance helps you pay for these services, which can be very expensive and, over time, can be financially devastating. A policy also ensures that you can make your own choices about what long-term care services you receive and where you receive them in advance.
Like other types of insurance policies, the cost of insurance coverage depends on the specifics of that coverage. Several factors can influence how much a policy may cost the insurer, including the place in which the care is received, the reason for care or severity of the patient/insured's condition, the geographic location of the care, the daily benefit amount, the elimination period, the time frame in which benefits will be paid, etc.
Who Needs It?
You may never need long-term care. But one thing is for sure: the need for care assistance dramatically increases after age 65. One study from the U.S. Department of Health and Human Services reveals that one in four people turning age 65 will spend one year or longer in a nursing home.
Types of Policies
There are a few types of policies available for consumers today. Some are known as "indemnity", "expense incurred", or "cash" policies. Indemnity plans are also called "per diem" policies that pay up to a fixed benefit amount regardless of what you spend (ie. you may spend more or less than the policy covers). Expense-incurred policies reimburse you for actual expenses incurred up to your fixed benefit amount, as defined by the daily benefit you purchased with the policy. With a cash-based policy, as long as the policy gets triggered by the ADLs, you will not be required to incur expenses to receive the benefits of your claim.
The purchase of LTC insurance should not be a stand-alone decision and must be incorporated with all other planning. When considering the purchase of an LTC policy, you may wish to consider purchasing optional benefits.