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Long Term Care (Seudi) Insurance

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 such as dementia or 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 (important to note like disability insurance, there is often a 90 day waiting period).

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.  These policies are a one size fits all with the amount depending on the you join (people under 50 – NIS 5,500 per month / NIS 10,000 if you are institutionalized; ages 50-59 it is NIS 4,500 per month / NIS 6,500 if you are institutionalized and 60 and up it is NIS 3,500 per month / NIS 4,500 if you are institutionalized).  Also, the payout is only for up to 60 months.

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 (the amount depends on age of joining the policy and how long you paid in).  The amount you save is called erech siluk (literally value at your disposal).  For example, let’s say Bob began paying into Clal’s policy for NIS 5,000 at age 30, but stopped paying in when he fell on bad times at age 55.  At age 67 Bob was in a terrible accident and become seudi.  In this case Bob would still get NIS 3,310 a month – even though he hadn’t paid into the policy in 12 years – (note I am making up the specific amount for this example, so you get the idea).  Only the policies with fixed rates have an erech siluk (value at your disposal).

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

Sadly, I have heard of a number of cases where kuppat cholim, just like other private insurance firms, have discriminated against those with preexisting conditions.  As always, they won’t deny the person and outright say it, but they will drown the prospective client in paperwork until they go away. If this happens, either be ready to fight or consider another provider.

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