Does Long-Term Disability Insurance Cover Long-Term Care?
Long-term disability insurance is a type of insurance that differs from long-term care insurance. Both of these insurances may be necessary for you to carry, depending on your situation. However, neither insurance is a substitute for the other. Make sure you understand what long-term disability insurance will and will not do for you in regard to long-term care.
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Types
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Long-term disability insurance is insurance that replaces a portion of your income, generally 50 to 60 percent of your working income, if you become disabled. This type of insurance pays a benefit to you after your short-term disability insurance benefits have expired. The long-term disability insurance may continue for two to five years, or until you reach age 65. Long-term care insurance is designed to pay for the cost of skilled nursing to take care of you if you are unable to take care of yourself. Normally, this is associated with care that puts you in a nursing home, but long-term care insurance may also provide coverage for private, in home, nursing care.
Significance
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The significance of long-term disability insurance is that it pays a benefit to you. Long-term care insurance normally pays a benefit that is meant to pay for your nursing care. Long-term disability specifically replaces a portion of your income.
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Benefit
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The benefit of long-term disability insurance is that it can be used for any purpose. This means that you can use some or all of it to pay for your long-term care needs. As long as you remain disabled, you may use this income to pay for either nursing home or in-home care.
Disadvantage
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The disadvantage to long-term disability insurance is that it is not meant to pay for long-term care needs. Because the payment is a fraction of your working income, it may not be enough to pay for your long-term care needs in full. You will likely need additional income or insurance to pay for your long-term care.
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References
- "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
- "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004
- "Life & Health Insurance, License Exam Manual, 6th Edition"; Dearborn Financial; 2004
