Differences between Disability and Long Term Care Insurance

Insurance policies come in many forms that provide benefit payments to the policyholder. Two types of policies include disability income and long-term care. Both types of policies can be purchased by a property and casualty insurer. However, disability insurance can be provided by a group health insurance plan that is available from an employer. Long-term health care policies are typically purchased by individuals that are nearing retirement age and are planning for the future.

Policy Types

Disability insurance policies come in two types which are known as short-term disability and long-term disability. These types of policies are also known collectively as disability income insurance. The object of this insurance is to replace lost income for a specified period. Long-term health care can be provided by a type of insurance known as long-term care. Long-term care provides payments for home health care and nursing facilities for individuals that can no longer care for themselves.

Short-Term Disability

Individuals that are covered by a group health insurance plan that is provided by an employer will have short-term disability included. When an individual becomes sick or hurt and cannot work short-term disability insurance can provide temporary income replacement. Employees are typically required to use any sick leave first before applying for short-term disability. Coverage typically covers 100% for the first 2 to 4 weeks and slowly decreases to 70% or 60% or wages.

Long-Term Disability

Long-term disability is also normally included on a group health insurance plan that is provided by an employer. Payments for long-term disability are typically set when a policy is purchased or coverage has been selected by an employee. Long-term disability polices will vary in length at which payout is made to an employee. Most long-term disability policies will provide payments that can last between 5 and 10 years or until the age of 65.

Social Security Disability

Individuals that have been injured and are not able to work may be able to apply for disability benefits from Social Security. However, Social Security Disability should only be used if there is no other alternative available. This is because not everyone can qualify for Social Security Disability and an applicant will need to show previous work history. Other requirements include being unable to work for at least one year and unable to work in any type of meaningful capacity.

Long-Term Care

Long-term care health care is very different from disability insurance. This type of coverage is needed for individuals that because of health issue or age can no longer care for themselves. Individuals will need to meet qualification requirements which include not being able to perform at least two daily living activities. Two types of daily living activities include bathing and dressing. Long-term care policies also have a waiting period before coverage becomes effective.