Tax qualified Indemnity Long Term Care Compared to Individual Disability Insurance
Benefit
LTCI
You select the benefit from $1500 per month to $12,000
Disability Insurance
The benefit is tied to your income and other coverage one may have in force. Typically the company can offer 55% of gross income.
How to qualify for a claim
LTCI
The insured has the inability to perform two of six activities of daily living or have a severe cognitive impairment-severe memory loss, Alzheimer’s disease. This is expected to last 90 days or longer.
Disability Insurance
The insured has a sickness or accident and is unable to perform the duties of his/her regular occupation.
How are benefits paid
LTCI
Benefits are paid in cash to the insured regardless of whether care is received for the condition.
Disability Insurance
Benefits are paid in cash to the insured
Elimination period
LTCI
Can be from 90 days to one year. This is satisfied once per lifetime
Disability Insurance
Can be from 30 days to one year. This is satisfied every claim
Maximum Benefit
LTCI
Expressed in years from as short as one year to unlimited. The maximum benefit, if less than unlimited, is per lifetime not per claim.
Disability Insurance
Expressed in years from as short as one year to as long as a lifetime. The maximum benefit depends on the age of the insured at the time of claim. The maximum benefit is per claim without limitation to number of claims during the insured’s lifetime.
Can the policy be canceled
LTCI
Can be canceled for non payment of premiums only.
Disability Insurance.
At older ages there is a requirement that the insured be working on a full time basis to maintain the coverage. If not working on a full time basis, the coverage will be cancelled.
Are premiums deductible
LTCI
Premiums may be deducted with the benefits coming in on a tax free basis. The amount of deductibility increases with age and is indexed annually
Disability Insurance
Depending on the business structure of the insured, they may be deducted.
How are benefit taxed.
LTCI
Benefit are tax free for the first $113,000 (2012) regardless of whether the premiums are deducted.
Disability Insurance
If premiums are deducted, the benefits are taxable. If no deducted the proceeds are income tax free with no limitation.
For more information about disability insurance or long term care insurance, contact Set for Life Insurance today!
