Disability and LTC

Disability and LTC

Welcome to Disability and LTC

In today’s episode, “Finding The Need: Financial Advice Founded In Faith,” let’s talk a little bit more about the protect element, you know, protect, save, and retire. We’re still on the protect element. So we’ve discussed how to protect the foundation of your plan through life insurance. Now let’s talk about two other products that should play into your protection foundation. One of them being disability and LTC. Everybody knows about disability insurance. 

Introduction to Types of Disability Insurance

Disability Insurance is probably one of the most frequently claimed products in the industry. When I mean claim products, people that actually use the product while they’re in their working years. Disability Insurance replaces a portion of your income. It won’t replace all of it but will replace a portion of it. There are two types of disability insurance, you can buy short term disability, which is typically for six months or you could buy a long term disability, which goes beyond the six months, but has a contractual limit depending upon what type of disability plan you purchased. Typically, a disability plan goes up to the age 65, sometimes 67, sometimes longer, but it’s not for life. So this is a plan that will replace a portion of your income when you become disabled. 


Why a Disability Policy Matters

How many people become disabled? More than 50% of the working population will become disabled during their working career. And I’m not talking permanent disability. I’m talking disability that will go on for months at a time. So do you need to have something to protect your income? Absolutely, most people in today’s world do not even have 30 days of income saved in the savings account. So can you imagine having something that takes you out of your working environment without a paycheck for six months, eight months, 12 months. It can be devastating to a family. So having a disability policy is very important. 


Employer-Provided Disability Insurance

Most people have disability insurance through their employer. Most employers, depending on their size will probably give you a six month or short term disability benefit as part of being an employee. Most companies will either charge you for a long term disability plan, or will not even offer one. So if you have the opportunity to purchase one through your employer, absolutely do it. 

How to Obtain a Disability Policy Outside of an Employer

If your employer does not offer one, then you need to purchase one. Disability policies tend to be very inexpensive. There are different types of underwriting that you’ll have to go through for disability policy is not just medical, but it’s also financial. Sit down with your advisor. Bring what you have available to you from your employer, so your advisor can see what is available for you through your employer. And then fill the gap if there is one by taking a look at what disability policies are available for you out in the public. So now let’s look at something that cripples a lot of families later on in life. And that is long term care, assisted living, having somebody take care of a family member in a nursing home, or an assisted living facility or critical care unit or step up facility, or even in their home. 


Taking Care of Loved Ones In the Short Term

This is something that because I can talk to this directly, I’m a baby boomer, we’re facing on a regular basis. How are we going to take care of people that no longer can take care of themselves? These sometimes are just a flash in a pan; it’s four or five or six months because of a minimal stroke. Sometimes they’re a lot longer because of a devastating stroke. Or we have dementia and Alzheimer’s you know, the one that really is putting a big financial hurting on our families going across the country. 

Long Term Care Policies

So what do we do about it? Well, there are products out there that you can talk to your advisor about. They’re called, Long Term Care Insurance Policies. Long Term Care Insurance Policies are different than anything we’ve discussed thus far. Because these products are health based products, they’re health based products. So these products can and sometimes do have different premium payments. 

Consider Where The Policy May Be Used

Depending on what state you reside in, or what state you may be having your care taken to. Just because you live in Illinois, doesn’t mean that you’re going to retire in Illinois. So you need to make sure that the product you purchased in Illinois may also be good in Florida, if that’s where you end up retiring, or in Arizona. 

The Right Time to Invest in an LTC

So Long Term Care Policies are varied. There are less and less companies offering Long Term Care policies each and every year. Long Term Care policies also typically have premium increases that go along with them. So you need to purchase a Long Term Care policy, typically in your 40s and 50’s that’s usually the best time because Long Term Care policies can be very difficult to apply for and to get issued for you. They are not as simple as a Disability policy, or a Life insurance policy, which we have just recently talked about. So you need to look at Long Term Care situations earlier in life that most people would want to think. By the time you want to look at Long Term Care, that’s usually too late. 

Conclusion About Disability and LTC

I’ve always told our clients that, long term care needs to be part of that protection mechanism. Because this long term care plan is going to give you the dignity of care. And it’s going to protect the assets that you’ve worked all your life building. So have a plan, not just about protecting today, and not replacing income today. But how are we going to protect everything later on in life, when you can’t take care of yourself, and you’ve worked 40 years building a nice estate. And you don’t want to lose it to a nursing home. So these are things that you need to sit down with your advisor and have a chat about (regarding disability and LTC). I believe that this will become one of your biggest foundation pieces in that protection part of protecting your family and your business.

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Watch This Series from the Beginning

Check out the first video in this series, "Introduction: Finding the Need" with host Bob Abbate. In this introduction, Bob will guide viewers on how to protect one's family, assets, investments, and also one's business. He will do this in a Catholic-centric way and in a way that is centered around the three Fs: faith, family, and finances.