Long Term Care Insurance VS Disability Insurance – Key Differences

When pursuing financial wellness, it is best to put certain protections in place. Often that comes in the form of various types of insurance. People often confuse two specific types of insurance – Long Term Care Insurance and Disability Insurance. We thought we’d take a moment to break down their key differences, and maybe a few similarities as well.

The main difference between long term care insurance and disability insurance:

  • Long Term Care Insurance (LTCI) – protects your assets from the financial burden of a long term care (LTC) event.
  • Disability insurance (DI) – protects your income in the event you can no longer work due to a disability or illness.
Requiring Physical Therapy after an accident would most likely fall under Disability Insurance.
Requiring Physical Therapy after an accident would most likely fall under Disability Insurance.
  • LTCI – Covers the cost of home care, assisted living, or nursing home care when you need care for an extended period of time. It can also cover the cost of home modifications and devices to help you stay at home longer. LTCI will not pay your mortgage if you stay in your home or standard bills.
  • DI – Covers the cost of your mortgage, bills, groceries, etc. but on a reduced income. LTC services may not be affordable if you are on claim for DI.

 

  • LTCI – You’re eligible for benefits after an elimination period (typically 90 days) when your doctor confirms you can’t do two out of the six Activities of Daily Living (i.e. eating, bathing, dressing, transferring, toileting, or continence). You’re also eligible for coverage if you’re cognitively impaired due to Dementia or Alzheimer’s.
  • DI – Short-term disability has a shorter elimination period (around 7-days) and lasts for a limited number of weeks. Long-term disability has a longer elimination period (around 90-days) and may last until Social Security Retirement Age. You’re eligible for coverage when you are unable to perform your job.
Developing Alzheimer's would be covered under Long Term Care Insurance.
Developing Alzheimer’s would be covered under Long Term Care Insurance.
  • LTCI – may be paid for by your employer or offered as a voluntary benefit. Individual coverage is also available.
  • DI – may be paid for by your employer or offered as a voluntary benefit. Individual coverage is also available. (Okay, so these are the same.)

 

  • LTCI – can be used during working years to pay for care if you experience an accident or an illness that makes you unable to care for yourself. LTCI is more commonly used in retirement years.
  • DI – can be used during working years to replace income if you experience an accident or an illness that makes you unable to work. DI is not used during retirement.

 

As you consider retirement, it’s important to protect your family and assets from the financial burden of an LTC event. To learn more about how LTCI can protect you, speak with an LTC Specialist and get a quote today.