Playing It Safe

Lucinda Andrew finds comfort in knowing she's fully insured

every year until she’s 65.

When her father got sick, Andrew took out a long-term supplemental disability plan. The premiums of $55 a month, or $660 annually, entitle her to a payout of $2,000 a month if the policy is invoked. This would supplement the 60% of her income she’d already be receiving from the other policy.

This policy can be converted to long-term coverage. In that case the long-term care insurance would pay $3,000 a month for nursing home, assisted living, or in-home care — up to a cap of $216,000. According to Andrew, a good nursing facility in Dallas now costs about $5,000 a month — an amount likely to increase exponentially by the time she may need one.

One of the best ways to lower the cost of coverage is to rely on your own resources for as long as possible. Long-term disability payments can kick in as early as 60 days to as late as 12 months after an accident. The length of time between the onset of a disability and eligibility for benefits is called the elimination period; the longer the elimination period, the lower the premium. Because she has an emergency fund of $36,000, Andrew can delay collecting benefits for as long as six months.

“As my family status changes, I will look into seeing if I need more coverage,” says Andrew. Though such policies are usually purchased by those with a spouse or dependents, Andrew, who is single, is safeguarding family members who would be called upon were she to face an emergency. She made a wise decision not to wait to get coverage, and because of that she exemplifies black enterprise’s Declaration of Financial Empowerment principle No. 6: I will preserve and protect my assets through proper financial and insurance planning.

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