Disability, Long-Term Care, and Other Health Products
Disability income
Disability income replaces a portion of earned income (typically 50–70%) and never pays more than the income lost, since that would create a moral hazard. Own-occupation pays if the insured cannot perform their own occupation; any-occupation pays only when unable to work in any job for which they are reasonably suited. Noncancelable policies cannot be canceled or have premiums raised and are renewable to a stated age; guaranteed renewable policies cannot be canceled but premiums may rise by class. The elimination period is the waiting time before benefits begin; the benefit period caps duration. Residual/partial benefits cover a loss of income after return to work, presumptive disability pays for losses such as sight or limb without income tests, and a recurrent disability clause waives a new elimination period for a relapse. Benefits are tax-free when premiums were paid with after-tax dollars. Business versions include key person and business overhead expense (short benefit periods, covers rent, utilities, and payroll - not the owner's salary).
Long-term care
Tax-qualified LTC policies trigger on inability to perform two of six ADLs for at least 90 days, or severe cognitive impairment. Features include elimination period, daily/monthly benefit, benefit period, and inflation protection. Partnership programs provide Medicaid asset protection. Medicare does not cover custodial care; Medigap supplements original Medicare only.
Other products
Critical illness pays a lump sum on a diagnosed condition; accident and hospital indemnity pay fixed amounts; short-term medical bridges coverage gaps; dental and vision are stand-alone.
Worked example: Insured returns to work, then suffers the same disability again four months later. Under the recurrent disability clause, no new elimination period applies.