Disability, Long-Term Care and Senior Health Products
Disability income
Disability income insurance replaces part of earned income. Key terms include benefit period, elimination period, benefit amount, and definition of disability. Own-occupation is broader and usually shorter in duration; any-occupation is stricter and often longer. Noncancelable policies guarantee renewal and premium; guaranteed renewable policies guarantee renewal but not premium. Residual or partial benefits pay for reduced earnings. Waiver of premium keeps coverage in force during disability. Occupation and income underwriting matter because benefits are capped as a percentage of earnings.
Long-term care and senior products
Long-term care insurance pays for chronic care, often triggered by inability to perform two of six activities of daily living or by cognitive impairment. Benefits may be reimbursement or indemnity, with elimination periods, benefit periods, and inflation protection. Partnership programs may protect assets under state rules. Senior products include Medicare Supplement, Medicare Advantage, and prescription drug plans.
Traps
Do not confuse elimination period with benefit period. LTC is not the same as disability income, which replaces wages. Medicare does not generally pay custodial long-term care. Own-occupation coverage is not always permanent.
Rule of thumb
For LTC, remember the two-of-six ADL trigger; for disability, focus on the definition of disability and the elimination period.