If I were to die tomorrow, my family would suffer financially; it is therefore imperative that I ensure that my salary could be replaced and my family could continue to live the kind of life we live today.  But if I were disabled, things would be much tougher.  Not only would my family have to replace my salary, but they would have to pay more to have someone take care of me.  This is where seudi insurance comes in.

A person becomes “seudi” (in need of long term care) in one of three ways:

1 – A person has a mental affliction (ie alzheimers)

2 – A person cannot control his or her ability to go to the bathroom, plus he or she cannot do one of the following five things: (a) eat and drink (b) get up and lay down (c) be mobile (d) shower and (e) dress and undress

3 – A person cannot do three of the following five things: (a) eat and drink (b) get up and lay down (c) be mobile (d) shower and (e) dress and undress

The insurance guarantees that if you qualify as seudi, you’ll get a certain amount of money (ie NIS 5,000) every month for 3 years, 5 years or life (FYI like disability insurance, this usually kicks in after a few months).  I personally do not understand why anyone would buy it for 3 or 5 years; if you’re disabled as outlined above, you need a caretaker for life.

Some of you are probably already saying “hey, don’t I have that from my Kupat Cholim?”  Well, yes and no.  Kupat Cholim offers its members to sign up for a collective policy with a different insurance company, which keeps the person insured for 5 years and insures the member in case of disability above for payments for 5 years (usually, as always, some exclusions apply).

The other option is to buy this insurance privately.  And here there are two options.  You can choose to buy it at a rate that will change every year (start out cheaper and pay more as you age) or buy it at a fixed rate (that only rises with the CPI, not due to your age).  The fixed rate also allows you to have a reserve amount set up, so if you stop paying in one day, you’ll still be covered, but not as much.  For example, if you’ve been paying in from ages 30 to 50 and then stop paying, but get injured at 51, you’ll still be covered, but instead of getting NIS 5,000 a month, you’d get NIS 4,000 (this is an example, not exact).

If you have the kupat cholim policy, you can buy a private policy that complements it.  For example, kupat cholim will pay you for 5 years; you can buy a policy that pays you every month for life after 5 years.

A similar insurance with very important differences is teunot ishiyot.

Teunot Ishiyot offers the insured a sum of money in the case of an accident.  There are five types:  K1: a certain amount of money for death from an accident (from an accident means within 12 months).  K2 allows for the sum in case of disability as well.  K3 gives a weekly amount for disability for up to 2 years.  K4 expands accident to include a particular list of sicknesses (ie cancer).  K5 expands the list to include all illnesses unless stated otherwise (ie all illnesses except Lou Gherig’s Disease.)

Personally, I don’t see why I’d need to insure myself in the case of an accident any more than in the case of any other kind of death.  Does my family suffer less financially if I drop dead than if I get hit by a car?  And the same goes for disability and sickness (I’ll get to the other kinds of health care soon for extenuating circumstances). 

Those who sell this will tell you that that this insurance offers you a big payoff in the case of an accident and illness, which you may like.  But insurance isn’t roulette; insurance is about covering you in the case of financial threat; you shouldn’t be playing it to hit the lottery as you, God forbid, get cancer.  There may be some cases when this is necessary, but your agent better have a very good reason specific to your case.

The primary advantage this insurance offers over others is that unlike seudi and disability, which generally carry a three month waiting period, this insurance kicks in after 7 days (14 if only K1 and K2).  So in short, if you have three months expenses on hand (which is an important goal), then you can save money and skip this insurance.  If not, then it may be worth to buy this insurance until you compile the money.

In summary, this insurance isn’t like health, life, disability or seudi.  This is the one kind where you really have to look with a good eye and ask yourself if you need this kind of coverage.  For many people, this coverage is superfluous and sold in place of seudi, which provides support the real support needed in the case of a long term disaster.  For others, particularly those without any savings, this may be helpful.