Virtually all health insurance policies have a “maximum liability” clause that caps the amount of money that will be paid under the policy. For those who have been permanently disabled or diagnosed with permanent or terminal illness, benefits may run out, leaving persons with little or no financial resources to cover medical needs.
Separate and distinct from health care insurance policies, “disability insurance” and “long-term care insurance” policies are available for purchase from private companies. Generally, benefits may be in the form of “income” (providing for periodic payments of a fixed amount to cover lost income during extended illness or injury) or in the form of continued payment of medical costs and expenses once conventional health policy coverage has been exhausted.
Long-term disability income insurance must be distinguished from long-term care coverage. In the former, benefits are payable to replace lost income during the expected or normal work career. According to the terms of the policy, benefits will cease once the insured reaches a certain age or after a certain number of years that equal those that would have been worked by the insured had he or she not been disabled by illness or injury. In the latter, benefits are payable, irrespective of age. These policies are generally expensive but provide extended benefits to cover nursing home care, rehabilitation, etc.
It is imperative that persons interested in purchasing private policies of supplemental, disability, or long-term care insurance thoroughly investigate their options and carefully articulate their needs to the agent or provider. Otherwise, duplicate coverage, redundancy, or worse, absence of necessary or intended coverage may result.