Long Term Care Insurance
While you are working and earning, you are also hopefully building up financial assets. It's important to protect these savings and investments for your future financial security. The need for extended or long term care could be a threat. Long term care insurance helps preserve those assets, while providing you choice and flexibility in the services that you receive. Remember, American are living healthier and longer. Longer life span in retirement has prompt many people to give serious considerations to long term care insurance products. Remember, nobody like the idea of spending a long time in a nursing home, or even in their own home care, but that is the reality of today. recent advancements in medical science have made it possible to have a longer life expectancy and a growing number of senior citizens are finding themselves unable to live independently. At the same time, medical and healthcare costs are rising with double digit rate increase every year making nursing home and home health care extremely expensive. There are extreme options such as reverse mortgage to pay for these expenses but would you risk losing your home for your healthcare expenses? For most people their home is their most valuable asset and thoughts of losing it to medical expenses are stressful. Long-term care insurance covers these expenses, and is something people in their late 50s to 60s should seriously consider purchasing. Remember, long-term Care insurance is a product designed to focus on medical care issues during retirement years and it generally covers extended health care at home, nursing homes, or assisted-living facilities.

However, long term care policies do not necessarily pay out in the same amounts for each of these choices; most notably, policies tend to pay less for home care. Like long-term disability coverage, policies also vary in their eligibility criteria; in this case, the determination of when someone can no longer live independently. Experts say an ideal plan's eligibility criteria includes cognitive impairment and inability to perform one or more activities of daily living, and does not require previous hospitalization or home care. Policies vary in their length of payout, from a couple years to "lifetime." Obviously a lifetime policy charges higher premiums, but not much higher - the typical nursing home stay lasts less than 3 years, meaning the risk of a lifetime policy to the insurer is not that much greater than a 2 or 3-year policy. Policies have a set amount of time between when care starts and when the benefits take effect (analogous to a deductible in other types of insurance coverage). The longer the waiting period is, the lower the premiums. Finally, like long-term disability, long-term care policies can be "guaranteed renewable", meaning the insurance company can not drop the policy. Most experts recommend a policy that is guaranteed renewable. Also, you can lock in a lower premium if you purchase your policy well in advance.

Most people think social security will take care of all the expenses related to long term care when they need it. This is not true. Social Security doesn't cover long term care and while it covers you medical expense thru Medicare, you will be surprised to see that all the routine check ups are excluded in medicare policy. Social Security doesn't even pay for most of the regular medical expenses, let alone long term care.

Disability Insurance: Disability insurance, like life insurance, is used to protect future earnings - disability insurance will replace your income in the event that you become physically unable to work. Although it gets less attention than life insurance, experts agree that disability coverage is at least as important. Disability insurance become even more important if you are the sole earner in your family and loss of income can cause significant financial problems. Remember, if you get hurt, all your medical expenses are covered thru the health insurance policy that you may have but it doesn't replace lost wages when you're in a hospital or even worse when you become permanently disable. In general, if you count on your job to pay the rent and buy food, you should seriously consider disability coverage. Disability coverage is also an topics that most people tend to misunderstand. for example, if you have earned enough credits, Social Security provides for disability coverage but it doesn't really protect your actual wages and earnings. Social security payout is far less than what you would have earned if you didn't become disable. Social Security is not a replacement or surrogate for disability insurance; at the most, it should be a last resort for those who can't get private coverage. Not everyone is eligible for Social Security benefits, even once disabled - the applicant must have significant work history, must have been unable to work for a year or more, and must not be able to work in any capacity.

How does Disability Insurance work?

Most employers offer disability insurance for their employees; however, the plans vary greatly, and some may not offer adequate coverage. For example, most common employer policies cover only 60% of your regular income if you become disable. Furthermore, any disability payouts from an employer's policy are subject to taxes, while payouts from individual policies are not. Individual disability coverage is generally much more expensive than employer disability coverage; nevertheless, you should review any policies your employer has taken out, and consider purchasing individual coverage if the policy is insufficient. Also, payout from employer policies will reduce the social security benefit if you become disable. Disability insurance is offered in two different flavors.

Short-term Disability(STD) - This coverage replaces a portion of lost salary in the event the policy owner misses six months or less of work. The coverage typically begins after all sick leave is exhausted, and replaces close to 100% of wages for the first payouts. If the policy owner remains unable to work, however, the payments will eventually drop, often to 60% of wages. The length of coverage and payment percentage vary from plan to plan, but these numbers are typical. One of the important fact to remember here is that Short term policy doesn't kick in until all your leaves(sick or personal) are exhausted. Most people don't need private short term disability coverage since employer policies are good enough to provide for 100% of the wages. However, if you're a self employed person or work for an employer that doesn't offer disability coverage, you should consider purchasing your own coverage.

Most STD policies have the same general design. You, or your employer, pay a monthly premium to be covered. When an illness or injury prevents you from working, you apply for a benefit by speaking with your Human Resources representative or your insurance agent. Most STD policies require a document from your doctor that explains your condition and estimates how long you’ll be gone from your job. There will probably be a waiting period between the date you leave work and the date when you actually receive your benefits. Many policies also require you to use some or all of your sick days before the policy begins to pay. Once the waiting period is over, you will generally receive a set percentage of the wages you received before you were disabled. For example, if you were paid $500 per week, and your policy pays 80% of pre-disability earnings, you’ll get a benefit of $400 per week. Short term policies generally last between 9 weeks and 52 weeks, after which time your benefit will end. You may then have the option of moving to a Long Term Disability policy or applying for Social Security Disability Insurance.

Long-term disability(STD) - Some experts contend that long-term disability insurance is the most important insurance you can purchase. This can be partially attributed to advances in medical care; some diseases and injuries are now disabling rather than deadly, meaning that the incapacitation can be lengthy. Typically, long-term disability insurance can be purchased to replace 50-70% of salary. Some employers allow employees to purchase extra insurance from the same company, sometimes raising the total to 80%. Note, however, that some policies have monthly maximum payouts, which may reduce the actual percentage of salary the policy owner receives. The "salary" is set at the time the policy is purchased, and you will likely want to increase the value of the plan as your compensation increases. Some plans only allow increases with a physical, some allow increases without a physical for the first few years of the plan, and some have other rules; check the plan for its particulars. One of the important thing that you should remember about LTD policies is that they will not pay until you die. some policies will only pay out for 5 or 10 years, some will pay out until age 65. Experts recommend the latter. Policies also vary in definition of disability (some contentious categories include mental illness and back injuries) and exclusionary criteria (pre-existing medical conditions, injuries from dangerous activities, etc.). At present there are numerous choices in benefit percentage, maximum duration, elimination period and disability definition. Most employer sponsored LTD coverages offer a work incentive benefit, empowering employees to return to work part time while continuing to receive their income replacement benefit (up to 100% of pre-disability earnings). They also offer a revenue protection benefit option, providing a benefit to a business while a covered revenue-generating employee is disabled and unable to work. A spouse disability option, providing basic disability insurance coverage to the spouses of covered employees.

Policies can be 'guaranteed renewable' and 'non-cancelable.' Guaranteed renewable means the insurance company cannot drop the policy, unless premium payments are skipped. Non-cancelable means the insurance company can never raise the premium on the policy. Both are desirable, but non-cancelable is usually best. There are a few important policy options (or "riders") that should be considered: "residual benefits" and "cost of living" (COLA). The residual benefits rider provides the difference between old and new salaries, in the event that the policy owner can get a new job, but not one with the same salary as his old one. The cost of living rider allows the policy's value to increase with inflation.

Finally, a disability policy can be designated as an "own-occupation" policy. Most policies are "any-occupation," which means the policy owner must work when he is capable, even if not in the same capacity as before. An "own-occupation" policy will allow the owner to collect benefits until he can resume the previous occupation. Typically, these policies are more beneficial to policy-owners with high-skill or high-paying jobs.

Final Verdict:How important is a paycheck to you as an employees? How would you pay bills if you lost your ability to earn a paycheck? Do you believe that worker's compensation coverage is all you need, even though it won't cover non-work related illnesses or injuries? Disability insurance provides financial benefits to people when they are unable to work due to a disability caused by a covered illness or injury, regardless of whether or not that illness or injury is work-related. Remember, last thing you want to worry about is your income loss if you become disable. Becoming disable is such an emotional and life changing experience and you want to make sure that you don't become a liability for your family and having a LTD insurance policy is probably one of the best thing you can do financially to help them manage your care. If you could afford to buy a LTD policy, take a closer and honest look at this option and protect your loved one.