Your daily benefit, also known as daily benefit amount or DBA, is the maximum amount of money your insurance company will pay you in a single day.
The amount that the premiums for your disability insurance policy depends partially on what benefit level you choose, as well as what age you are when you first purchase your policy. If you have a higher daily benefit amount, your premiums are going to be more expensive. If you choose a lower daily benefit amount, your premiums will not cost you as much.
As a disabled person, if you are able to pay a portion of the cost of living and care out of your own pocket, you may want to choose a lower daily benefit amount. If you live in an area where the cost of care is lower than the national average, you may also want to consider choosing a daily benefit amount is lower.
However, if you live in an area where the cost of care is higher than the national average or if you can’t pay for some of the cost yourself, you may want to choose a higher daily benefit amount.
A good rule is to choose a daily benefit that is at least as high as the current usual cost of nursing home care where you live. You can expect to have to pay for some costs of care other than the basic amount.
Daily benefit amounts may be offered from $50 to $300, sometimes in increments of 25. The national average cost for nursing home care is $183. Benefits may be used to cover the cost of a nursing home stay, and they can usually also be used for assisted living facilities, adult day care centers, and services provided at home.
Disability insurance policies often have a maximum amount of money that will be paid for different types of residential care. Some policies will allow a higher daily benefit amount for nursing home care than for community care. Typically, community care and assisted living areas aren’t as expensive as nursing homes because those who live in nursing homes require 24-hour care and supervision. Those who live in assisted living areas and other such places of residence do require as much care.
There may be some restrictions on certain types of residential facilities and your benefits may not be as high. Also, be aware that some assisted living facilities, especially those with special needs areas like dementia units, can cost just as much as a nursing home.
Home care is likely to be even more expensive and the policy will usually pay you less in benefits that is needed for constant, 24-hour home care or even home care while you are awake. Many policies pay half the daily benefit amount for home care. If the daily benefit amount is $100, then you would only have $50 to pay for a home-care aide, which would only pay for about 4 or so hours. If it is a family member providing the at-home assistance, then the amount is usually even less, often at half the amount of the already reduced daily benefit. Some policies require that an agency be in charge of the home care, which will be expensive to be for, especially with a reduced daily benefit. If you are considering home care, realize that while it may be preferable, it is the most expensive type of care.
Be sure to check with your personal insurance provider to learn about the details of your plan concerning the daily benefit amount and the type of facilities that are acceptable for the daily benefit amount that you need.