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Choosing between long-term care and long-term disability coverage

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We talk a good deal here about long-term care and long-term disability insurance. If you're considering getting either or both, that's great. It means that you're planning for your and your family's future. Ideally, you can afford both. However, if you, like many people, can't, which is a better choice for you? First, it's important to understand the differences between the two.

People with long-term care insurance can usually begin receiving benefits when they can no longer independently handle at least two of what are considered the six "activities of daily living." These include things like feeding and dressing yourself, bathing and using the bathroom. For many people, this involves moving to an assisted living facility or nursing home. However, long-term care insurance can also be used for in-home care or day care.

Long-term disability insurance is designed to pay part of your wages if you aren't able to work for an extended period because of an illness or injury. Most policies cover 60 percent of the person's salary.

When deciding between these two types of insurance, there are several important factors that you should take into consideration:

Cost of premiums: If you can purchase long-term disability insurance through your employer or other group plan, it will generally cost less than an individual policy. Premiums can vary significantly based on age, health and gender. The average annual cost of LTC premiums is about $2,300. However, premiums are more likely to increase over time than disability premiums are.

Your health: If you have pre-existing physical or mental conditions, those may not be covered by a long-term disability insurance policy. However, some conditions can also preclude you from qualifying for LTC coverage. Either way, it's preferable to get the insurance while you're still relatively young and healthy.

Your retirement plans: If you'll be depending on a paycheck for some time, you'll want to protect your income, which is what disability insurance helps do. However, if you have savings and other sources of money to retire on, LTC coverage may be the best choice.

Whichever type of policy you choose, it's essential to read and understand the fine print and possibly get professional financial or insurance advice. No policy will do any good if you're not able to receive benefits when you need them. If you believe that you are wrongfully being denied benefits, you may want to seek legal guidance.

Source: Forbes, "Long-Term Disability Insurance Vs. Long-Term Care Insurance," Robert DiGiacomo, Next Avenue, accessed Aug. 26, 2015

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