Disability and long term care insurance
About this video
Sal explains two types of insurance that are often confused. Disability insurance replaces some of your income if you lose the ability to work, while long-term care insurance helps pay large medical costs such as an extended hospital stay. Employer coverage is often not enough, so people without savings may want their own policies.
You'll be able to
- explain what disability insurance covers.
- explain what long-term care insurance covers and how it differs from disability insurance.
- explain why someone might buy these policies even if their employer provides some coverage.
Key words
- disability insurance
- Insurance that replaces some of your income if you lose the ability to do your job.
- long-term care insurance
- Insurance that helps pay for large ongoing care costs, like an extended hospital stay.
- premium
- The amount you pay regularly to keep an insurance policy.
- policy
- The insurance contract that says what situations are covered and how much is paid.
Transcript
- Talking about insurance is never a lot of fun, because you're talking about, or you're thinking about things that most of us don't want to have to deal with in life. And I'm going to continue that trend by talking about two new scenarios of insurance, and that's disability insurance, and that's long-term care insurance.
And sometimes those two get confused. Disability is a situation where, if for whatever reason, you become disabled, and you're not able to work anymore, how are you going to support yourself, and support your family? You are going to need some form of income. And so that's what disability insurance is all about.
You pay the premium, and if, for whatever reason, you are not able to work, because you've lost your ability to work, it can't just be I don't feel like working. But if the insurers say, "Okay, that's what was covered, that was one of the scenarios, you are no longer in a position to do that job."
Then that will cover your income, up to some amount, depending on what the actual policy said. Now long-term care could be related to it, or it might not be. Above and beyond lost income, if you have some type of an accident or disease that makes you not be able to work anymore, you might have significant medical expenses.
You might have to, I mean, these are situations that none of us want to see happen, but you might have a extended stay in a hospital, which can be very, very, very expensive. Even if you are able to maintain your income, because of some kind of disability insurance, or have some income, it might not be your full income, because of the disability insurance, you now have a much bigger expense, because of all these hospital expenses.
And that's what that long-term care insurance is all about. And it's not just for older people. It could be, and I keep saying, this is a situation none of us want to be in, Where you get into an accident and you have an extended stay in the hospital, it can cover that.
So in some cases, employers will provide these types of insurances, but they're oftentimes not enough coverage to fully protect you. So if you're worried about these, and if you don't have savings that can provide you and your family a cushion, if one of these pretty horrible things happen to you, you might want to think about disability insurance, and/or long-term care insurance.
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