Frequently, people have a tendency to get confused about this subject. When people are asked how they plan to protect their assets and income in case of a long term treatment situation, almost every time answer will be the same; “Well I have a disability insurance… ”
Confusion starts with the definition of Disability Insurance where people obtain Short Term Disability and Long Term Impairment confused with Long Term Care. There is a distinct difference between the two insurance plans and in order to have a better understanding of the difference, we need to know what each insurance plan vehicle offers as protection.
We will start explaining what Disability Insurance policy offers without going into too much details as in Long Term or Short Term Disability: In a nut shell, Disability insurance policy provides a portion of your income for a certain period of time when you are disabled while you are utilized. What this means is when you get disabled, you might receive up to 40, 60 or maybe 80 percent of your total revenue for a specific period of time. Further more, this actually also means two things:
(1) You are not going to receive any supplemental income for the cost of your care throughout your disability insurance; all you are going to get is the portion of your income.
(2) You will receive a portion of your income for a specific period of time. When this period is over, your earnings from your disability insurance will catch.
So you can actually see that the benefits of Disability Insurance are very specific and restricted. Nevertheless this simply doesn’t mean that Disability Insurance is not a valuable defense plan. When you learn the benefits of Long-term Care Insurance, you should be able to understand that the two protection plans take separate and important precedence in our lifestyles.
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Before we get into the benefits of Long Term Care Insurance, we need to clear out one particular misconception about this insurance plan; Long Term Treatment Insurance is not necessarily some insurance policy that you purchase to get care when you are older, and it is not particularly a nursing home care either. Individuals get into Long Term Care situation within younger ages too and Long Term Care Insurance is a great protection program that provides many valuable benefits.
Among many of these benefits, of course the most important the first is to provide funds for your care if you are unable to do some of your daily activities. This is actually the main difference between this plan as well as the Disability Insurance; Long Term Care Insurance coverage does not provide income or any part of your income, it actually pays for the expense of your care up to certain amount which is determined within your policy. In other words, Disability Insurance provides you a portion of your earnings where Long Term Care Insurance in fact pays for the cost of your care. Now you can see the importance and the complimentary nature of the two insurance plans; while you are receiving a portion of your income through your Disability Insurance plan – which is always less than your regular income, you will also have your Long Term Care Insurance paying for the price of the care that you are receiving.
Thinking about the present high cost of care, plus having to pay for it with a limited revenue may become an enormous financial burden. This really is one of the most important reasons why these two insurance plans exist. It is also as important plus highly recommended that you should consult an insurance professional who can coordinate and design these types of policies according to your specific personal requirements for your full protection.
Remember, you should protect the most important asset in your life: Your Earning Power!
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