Caring for Family
can result in a significant loss of earnings due to the time away from work. Income security, therefore, is not just a matter of the worker's own health, but that of his or her immediate family as well.
Multiple Points of Exposure
The serious illness of any one immediate family member can pull the individual away from work, causing a loss of income. Aging parents, for example, put a worker at high risk of extended absence longer than what paid leave will cover.
Disability of the insured person is irrelevant for purposes of family care benefits. However, the worker must experience an income loss due to care obligations for an immediate family member, not just any family member. Immediate family includes:
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Parents of the insured, not in-laws
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Spouse or Domestic Partner of the insured
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Children of the insured, including adopted or step
How Sick Does an Immediate Family Member Need to Be?
Policies use words like "seriously ill", "catastrophic", "terminally ill", and the like. Conceptually, thresholds resemble long term care insurance triggers and terminal illness acceleration triggers. For example:
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Requires Substantial Supervision for his or her health or safety due to Severe Cognitive Impairment; OR
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Unable to safely and completely perform two (2) or more Activities of Daily Living (ADL's) without hands-on assistance or standby assistance due to loss of functional capacity; OR
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Is terminally ill with a condition that is reasonably expected to result in death within twelve (12) months; OR
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Is receiving inpatient care in a hospital, hospice or residential care facility.
The above is a generalization for purposes of understanding the market as a whole, not a representation of any specific policy.
Guaranteed Issue
Family members do not have to cooperate, qualify, or even be aware of such coverage at the time the policy is issued.
The policy owner (the worker), however, must qualify because the insurer also pays in the event of the worker's own illness or accident. In group settings, it is possible to qualify on a Guaranteed Standard Issue (GSI) basis depending on the nature of the group and plan design. GSI qualification is streamlined for express issue in group cases.
Standalone individual policies are issued subject to medical, financial, and occupational underwriting of the insured worker.
The Worker is the Insured
Family Care is a feature of some disability income policies designed to insure the worker's income against loss due to care-giving obligations for a seriously ill family member, in addition to his or her own health risks.
Therefore the insurer's focus for purposes of underwriting the risk is on the worker, not the worker's family.
How Do Insurers Protect Themselves?
Chiefly, by a requirement that the family member's condition first manifested after the policy effective date. Therefore, coverage must be purchased long before the need is imminent.
Additionally, there are special limits on how long Family Care benefits can be paid, such as six (6) months.