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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 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.  These policies are usually cheaper because they have a number of exclusions and only pay out for a limited time (Leumit pays out for life, but it reduces the payout over time, which financially is kind of the same thing as just paying out the full amount for less time).  Every kupa has a different form of coverage (for now) so it’s worth really understanding what you have and don’t have before you choose to limit yourself to this coverage.  In 2015 a new uniform policy will be unveiled which will be identical for all of the kupot cholim.

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 ערך סילוק (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.  Only the policies with fixed rates have ערך סילוק (value at your disposal).

Another feature that nearly all seudi policies have is that there is a שחרור (literally “freedom”) from paying in the event that the person is being paid out from the policy as someone that is seudi.

Finally, 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.