When considering financial planning many people fail to realize the importance of disability insurance and long-term care insurance. While these types of insurance are very different from each other they compliment each other perfectly. Disability insurance offered by Tennessee Insurance Group protects your most valuable asset: your income. Long-term care insurance covers the cost of nursing homes or home health care so that your life savings and earnings are safe.
DISABILITY INSURANCE
Nearly everything that we do and nearly everything that we have is paid for with our incomes. The house we live in, the vehicles we drive, and the vacations we take are all paid for by the salary that we earn. While most people in Tennessee have a basic understanding of what it means to be disabled, few understand how significant a disabling injury or illness is and how devastating it can be to a family′s financial security.
A disability insurance policy will replace a person′s income if they are unable to work due to an injury or illness.
The amount of income replacement will naturally affect premium. Other factors that affect premium are the proposed insured′s health status, type of employment, job duties, and the type of coverage selected.
There are two types of disability policies to choose from:
- Long–Term Disability (LTD)
- Short–Term Disability (STD)
Long–Term Disability
A long–term disability policy is designed to replace lost income for a period of time ranging anywhere from two years to retirement age. If choosing between the two types of coverage, long–term is the better choice because of the amount of potential replaced income.
Short–Term Disability
A short–term disability policy is designed to replace lost income for a shorter period of time ranging anywhere from six months to two years. This type of policy is less expensive than its counterpart, but because the length of coverage is much shorter, it leaves the insured at risk of losing a lifetime of earnings after benefits have been exhausted.
LONG-TERM CARE INSURANCE
Long–term care insurance is the most misunderstood type of insurance available today. Many people believe that long–term care is covered by their health insurance policy, but it′s not. This type of insurance covers the costs of skilled nursing, home healthcare, and other assisted living services in Tennessee when a chronic condition, trauma, or illness limits an individual′s ability to carry out basic self–care tasks called activities of daily living (ADLs). Activities of daily living include bathing, dressing, eating, household chores, meal preparation, and managing money.
Different long-term care companies offer different options that are chosen at the time a policy is applied for, but five major components are found in all policies:
- Daily Benefit – The amount that the policy will pay for each day that long–term care is required.
- Inflation Benefit – This component refers to how the daily benefit will grow in order to keep pace with inflation.
- Benefit Period – The life span of the policy. The plan will pay benefits according to the benefit period selected.
- Elimination Period – Refers to the number of days that must pass after qualified care is needed before the policy benefits begin.
- Care Settings – The place that long–term care will be provided.