Introduction to disability and long-term care insurance

Have you ever thought about what would happen if you got injured or sick and couldn't work for a long time? How would you pay your bills and take care of yourself or your family? That's where disability insurance and long-term care insurance come in. These types of insurance can help replace your income and pay for care if you can't work or take care of yourself because of a disability or a chronic illness.

Disability insurance helps replace your income if you can't work because of an injury or illness. This insurance pays you a percentage of your salary, usually between $50\mathrm{\%}$‍ and $70\mathrm{\%}$‍, until you can go back to work or for a certain period of time.

Long-term care insurance, on the other hand, helps pay for care if you have a chronic illness or disability that makes it hard for you to take care of yourself. This includes things like nursing home care, home health care, and adult day care.

Becoming disabled or needing long-term care can be scary and expensive. It can also have a big emotional and financial impact on you and your family. Disability and long-term care insurance help protect you and your loved ones from these costs and risks.

The chances of becoming disabled or needing long-term care are higher than you might think. In fact, about $1$‍ in $4$‍ young adults will become disabled before they retire.${}^1$‍ And, $70\mathrm{\%}$‍ of people over age $65$‍ will need some type of long-term care in their lifetime.${}^2$‍

Becoming disabled or needing long-term care can be expensive and emotionally challenging for you and your family. Medical bills can add up quickly, and you may need to pay for things like home modifications, therapy, or caregiving services. Your family might also need to help take care of you, which can cause stress and financial strain.

You might think that Social Security, Medicare, Medicaid, or your family could help cover the costs if you become disabled or need long-term care. But these sources often have limitations and may not cover everything you need.

For example, Social Security only provides disability benefits if your disability is expected to last at least a year or result in death. Medicare only covers certain types of long-term care, and Medicaid usually only helps those with very low incomes. Relying on your family for care can also be difficult, as they may not have the time, resources, or skills to provide the care you need.

The cost of these insurance policies can vary significantly based on factors such as your age, overall health, and the extent of coverage you select. Some policies may have high premiums, but they may offer more comprehensive coverage. Others may have lower premiums, but they may have more restrictions on the types of care they will cover. It's important to compare different policies and understand the costs and benefits of each one.

The good news is that a large number of employers offer disability insurance that you can purchase through your paycheck deductions, and some employers even pay for it fully - all you need to do is enroll. It is definitely worth checking with your employer if they help pay for some, or all of the premiums.

One big benefit of having disability and long-term care insurance is peace of mind. You might be thinking, "I'm young and healthy, so I don't need to worry about this stuff." But accidents and illnesses can happen to anyone, at any age. Having insurance means you'll be better prepared if something happens to you.

To help you understand how these insurances work, let's look at these two scenarios:

Sophie is in her early $\text{30s}$‍ and she just had a stroke. After being hospitalized and going through rehabilitation, she still needs help doing everyday things like bathing, dressing, and eating. Sophie's long-term care insurance will help pay for a caregiver to come to her house and take care of her while she recovers.

Jose is a construction worker who was recently in a car accident. He had to have surgery on his back and is unable to work for several months. Luckily, Jose has disability insurance. This insurance will send him a check every month he's unable to work, so he can still pay his bills and take care of his family.

That's a question you'll have to answer for yourself. Think about your own situation, your health, and your family. If you decide that you want to be prepared for the unexpected, these types of insurance could be a good investment.

Remember, the best time to get insurance is when you're young and healthy. The longer you wait, the more expensive your premiums might be. So, if you think disability and long-term care insurance might be right for you, it's a good idea to start looking into your options now.