Find Your Peace of Mind by Expanding Your Insurance Portfolio
If you have a car, the law says you must have auto insurance. If you own a house, chances are your mortgage comes with a requirement to carry homeowners insurance. You may have liability insurance, flood insurance — even insurance for your pets. And while Fido’s well-being is important, too many people overlook two essential kinds of insurance: disability and long-term care. Both protect you from financial hardship, but they’re distinctly different and can work in tandem to give you peace of mind in the face of the unknowable future.
The Reality of Disability
Most people consider their home as their most valuable asset, but your ability to earn an income is perhaps just as valuable, if not more so. In fact, Social Security Administration data shows that a 20-year-old has a 25% chance of being disabled before retirement.
Short-term disability insurance can replace income temporarily while you recover from an accident or illness. It can replace up to the full amount of your pre-disability income, typically for about three to six months. A long-term disability policy can often cover 50% to 70% of income, and it could last up to 10 years — even until retirement. Coverage isn’t limited to obvious injuries such as falling from a ladder and hurting your back — depending on your policy, it could also include things like chronic illnesses, mental health conditions or repetitive stress injuries that prevent you from working.
For those without insurance, the Social Security Administration does offer Social Security Disability Insurance (SSDI), but getting approved can take years and the benefits aren’t likely to cover all your expenses, averaging just $1,580 a month in 2025. In addition, SSDI is subject to changing government policy, so there are no guarantees of what will be available in the future.
In the Long Term, Most of Us Need Long-term Care
Long-term care insurance addresses a different but equally pressing concern: the cost of custodial and skilled care services as you age or if you develop chronic conditions. The Department of Health and Human Services estimates that 70% of people over 65 will need some form of long-term care, whether in-home assistance, adult day care, assisted living or nursing home care.
All of those services are expensive, and most aren’t covered by health insurance or Medicare. As of 2025, the average cost of a nursing home was $114,665 to $131,583 nationally, while nonmedical in-home care averaged $33 per hour. Without long-term care insurance to pick up the tab, these expenses can quickly wipe out retirement savings and become a financial burden to family members.
Long-term care insurance can help preserve your assets and allow you to pay for additional care. Many policies give you flexibility over how benefits are used and may include payments for care coordination — and possibly even training for family caregivers.
Why You Need Both
Disability and long-term care insurance are for two different — but equally difficult — situations. During your working years, disability income insurance is crucial so that an unexpected illness or injury doesn’t derail your financial progress or worse: In the U.S., nearly two-thirds of bankruptcies are a result of medical debt.
Long-term care insurance can help protect years of careful saving from being wiped out by extended care costs. For example, let’s say you become disabled in your 40s, recover and then continue working until retirement. Disability insurance would help protect your income during your recovery so you’re able to get well and get back to work. If you develop Alzheimer’s later on, you could need years of specialized (and expensive) care. Long-term care insurance helps protect your retirement assets.
Taking Action
Generally, the best time to buy both disability and long-term care insurance is when you’re younger and healthier, though it’s never too late to explore your options and secure coverage that fits your needs. A Financial Professional can help gauge the right amount of protection for your situation, evaluate your current coverage and assess your family’s needs.
Sources
https://www.ssa.gov/pubs/EN-05-10029.pdf
https://www.allsup.com/your-ssdi/expert-answers/how-much-money-will-i-receive-from-social-security-disability-insurance-ssdi
https://www.schwab.com/learn/story/disability-insurance
https://acl.gov/ltc/basic-needs/how-much-care-will-you-need
https://www.seniorliving.org/nursing-homes/costs/
https://www.aplaceformom.com/caregiver-resources/articles/in-home-care-costs
https://worldpopulationreview.com/country-rankings/medical-bankruptcies-by-country
https://www.cms.gov/medicare-medicaid-coordination/fraud-prevention/medicaid-integrity-education/downloads/infograph-custodialcarevsskilledcare-%5Bmarch-2016%5D.pdf