Disability Income, Long-Term Care and Other Health Products
Disability income
Benefits replace roughly 50–70% of income. Key definitions: own occupation (cannot perform the duties of your specific job - broader and more expensive, and often limited to the first two years) versus any occupation (cannot perform any job for which you are reasonably suited by education, training and experience). Also know the elimination period (time before benefits begin), benefit period, residual or partial disability benefits, presumptive disability (loss of sight or two limbs), recurrent disability, cost-of-living adjustments, and the Social Security and workers compensation offsets.
Renewability is heavily tested: noncancelable means the insurer cannot cancel, change the premium or restrict benefits; guaranteed renewable allows premium increases by class only; conditionally renewable is weaker still. Occupational policies cover work-related and nonoccupational illness and injury; nonoccupational policies cover only off-the-job events.
Business uses include key person disability, business overhead expense and buy-sell funding.
Long-term care
The trigger is inability to perform two of six ADLs (bathing, dressing, transferring, toileting, eating, continence) for at least 90 days, or severe cognitive impairment. Learn levels of care (skilled, intermediate, custodial - custodial is the core LTC need), settings (home care, assisted living, adult day care, nursing home), elimination period, daily or monthly benefit, inflation protection, and the Florida Partnership program that grants Medicaid asset disregard.
Trap: Medicare does not pay for custodial long-term care. DI benefits are tax free only if the insured paid the premium with after-tax dollars.
Also know critical illness, accident, hospital indemnity, dental/vision, and Medicare supplement products.