The importance of long-term insurance

Long-term disability insurance and long-term care insurance are worth the cost, Hamm writes. Professionals whose income supports their family should especially consider obtaining long-term disability insurance and long-term care insurance.

Jeff Barnard/AP/File
In this June 2012 file photo, Dr. Bruce Stowell examines patient Robert Busch at his office in Grants Pass, Ore. Hamm writes that long-term care insurance is well worth the investment for the elderly and people approaching retirement.

Long-term disability insurance and long-term care insurance are difficult issues to talk about.

For starters, there are many situations where these types of insurance are never needed at all. If someone passes away very suddenly, the money spent on these insurances goes for naught.

In some situations, the premiums might simply be beyond what they can actually afford. These types of insurance are not free, after all.

In my view, the benefits of long-term disability and long-term care insurance are worth the cost, but only if you’re in a position to afford it without putting your finances into crisis mode.

So, what are these policies?

Long-term disability insurance is a type of insurance that provides you with some portion of your salary in the event that you’re no longer able to work because of your job. Some employers offer this coverage directly, but in many cases, you have to obtain it yourself.

Long-term care insurance is a type of insurance that pays for some or all of the costs of your long-term care if you find yourself in a situation where you need extensive care for your health. Often, this occurs near the end of one’s life, when medical issues begin to mount.

In both cases, you need to fully understand what is being insured when you get the policy. While some policies are very strong, others are full of loopholes which minimize what the insurance company would have to pay.

So, when do you need these policies?

If you’re a professional who earns an income that your family simply could not live without, you should strongly think about long-term disability insurance. There are many situations where your ability to do your job could be limited severely without taking your life (blindness, severe injury, brain trauma, countless diseases). If you’re making a strong income and your family relies on that, you should think about this type of insurance.

On the other hand, long-term care insurance appeals more to retirees and people approaching that age. The goal with long-term care insurance is to make sure that you’re covered as well as possible should you need long-term care during your final years. If you have a spouse, a large part of the reason for obtaining the insurance is to protect your partner.

In either case, get the insurance only if it doesn’t break the bank for you. Most of the time, the cost is on the order of a hundred dollars (or two) per month, depending on your specific situation. Get it if you can afford it, because the peace of mind it can give you is worth it.

What if you can’t afford it? Use this post as a call to arms to get yourself in a position where you can.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.

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