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Protecting What Matters Most


Long-term Care vs. Long-term Disability… What’s the Difference?

If you’re confused between long-term care and long-term disability, don’t worry, many are.  The truth is these two insurances, with very similar names, are very different. However, both are necessary. To conquer some of that confusion, let’s dig a little deeper into what these insurance plans are and how they may benefit you.

Long-Term Care Insurance

What is it? As you grow older, there is a good chance you will need someone to take care of you. Long-term care insurance pays a daily or monthly benefit towards your cost of care for in-home assistance, or at a nursing home or assisted living facility. Not to be confused with  medical care, this type of care is for activities of daily living such as bathing, dressing and eating

Why do I need it? Unfortunately, we don’t know what the future holds. According to LongTermCare.gov, today’s 65 year olds have almost a 70% chance of needing some sort of long-term care assistance in their lifetime, and 20% of those 65 year olds will need it for longer than 5 years. So the chances of you needing long-term care in the future is pretty substantial. In an article published by the Doctor’s Journal, it emphasizes the need for long-term care as a risk management guideline.

When should I buy it? When you buy insurance, you buy it to protect something – your car, your home, your health, so now it’s time to protect your future.  Although it may seem like a “later-in-life” type of insurance, but the truth is, the earlier you buy it, the better off will be. However, industry statistics show that individuals under the age of 50 rarely think about long-term care.

"Most people won't ask about long-term care insurance at 45 - it won't be on their radar. They'll ask about it at the age of 55 or 60 when their parents are going through these issues. They don't have the fear of reality until they're over 55." – says Rich Arzaga founder and CEO of Cornerstone Wealth Management.

According the to American Association of Long-term Care Insurance, in 2012 3.5% of individual policies were bought by people age 44 and under. While nearly 25% of individuals age 60-69 were rejected. So the younger you are the better chances you have to qualify for long-term care insurance and at a better rate. Long-term care insurance is a lot like life insurance -- the younger you are, the lower your premiums will be.

Plus, if you do need long-term care assistance later down the road, you don’t want to have to pay for it out of your own pocket, or have a family member pay. In a survey by Genworth, the daily rate for a nursing home was $212 and the monthly rate for an assisted living facility is $3,500. No matter which option you choose, both come with a sizable cost.

Long-term Disability Insurance

What is it? This is an insurance policy that protects you from loss of income if you become sick or injured and you are not able to perform the material and substantial duties of your occupation. Long-term disability benefits pay you a percentage of your base salary. As a physician, receiving compensation can help you pay bills and keep you and your family financially secure. Plus, it means you won’t have to dip into your savings account. Long-term disability coverage typically lasts up to 10 years, or until 65 years of age.

Why do I need it? Even though most working Americans estimate that their own chances of experiencing a long-term disability are low, statistics have shown that 61% of surveyed wage earners personally know someone who has been disabled and unable to work for 3 years or longer. The statistics also showed that the financial hardship that a disability can cause is unimaginable for most successful physicians, but medical problems contributed to 62% of all personal bankruptcies and half of all the home foreclosures. So if you’re disabled and you can’t work, the last thing you want is to lose your home or go bankrupt.

According to the Council for Disability Awareness Claims survey in 2014, the leading causes of disability were musculoskeletal system and connective tissue disorders, with nearly 29% of new claims falling into this category, and cancer was the second leading cause of new disability claims. Even though you may not think you will be diagnosed with a disabling condition, the survey showed that in 2013 nearly 2.5 million workers under the age of 50 were receiving SSDI.

When should I buy it? In a 2012 survey sponsored by the Consumer Federation of America and Unum, 77% of working Americans reported that they would suffer great or moderate financial hardships if they were unable to work for 3 months. As a successful physician, you may not think that you would have financial burdens from just being out of work for 3 months, but what if 3 months turned into 3 years? Unfortunately, now you know that most individuals under 50 don’t think disability insurance. However, just like any other insurance, the younger you are, the better rate you should get.  Also, you want to get insurance early enough before any health conditions occur.

As you can see there is a major difference between long-term care and long-term disability insurance, but the reason why you may need both is to protect your future. Still wondering if you need it? Contact us to learn more about the diffrences between Long-term care and Long-term disability.

Speak with a TMA Insurance Trust Advisor:

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