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Should you choose long-term care or disability insurance?

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It's important to have insurance to help you if you become disabled or ill to the point where you cannot take care of yourself and/or work for a long period. Many people assume that this possibility is a long way off. However, it can happen at any age to anyone, regardless of how healthy they may be.

Ideally, it's best to have long-term disability coverage as well as long-term care insurance because they are two different types of insurance. A long-term disability policy will generally cover about 60 percent of your salary if you cannot work for an extended period due to illness or disability. LTC insurance can be used if a person becomes unable to perform at least two of the six daily living functions. These include things like dressing and feeding yourself.

Having both types of insurance, however, is not always affordable -- particularly if your employer doesn't offer group long-term disability insurance. Therefore, many people must determine which type of insurance is better for them. This is particularly true for people as they reach their 50s, when they should start planning for how to pay for nursing home, assisted living or in-home care in their old age.

A key factor for many is the amount of money that they will have to pay in premiums. Whichever type of policy you get, you don't want to have to cancel it due to the price. Both types of insurance can vary significantly in price. Both, if bought individually rather than through an employer-sponsored program or professional association, are generally based in part on your age and health. Some pre-existing conditions can be excluded from your coverage.

Long-term disability policies may also be based on your salary. LTC premiums are more likely to increase over time than long-term disability premiums. Women generally pay more than men for both types of insurance because overall they live longer.

Another consideration should be how long you have until retirement. Long-term disability insurance through an individual policy generally ends when a person turns 65. One financial expert says that it's most worthwhile for people who have at least 10 to 15 years left before retirement.

Whatever type of policy you choose, it's important to do your homework. You want to do your best to ensure that you choose an insurer and a policy that will pay you when you need benefits.

Source: Forbes, "Long-Term Disability Insurance Vs. Long-Term Care Insurance," Robert DiGiacomo, Next Avenue, accessed Dec. 01, 2015

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