column has been created to provide you with information about the
various insurance and planning options available to you in the event
you or a loved one becomes seriously ill and may or may not need
professional care. People have different interpretations of the term
‘long term care’ and generally speaking, for insurance purposes, this
means an individual requires constant and ongoing professional care. It
is important that you understand the benefits of the coverage you have
so that it meets your expectations.
will focus on all aspects of living benefits insurance. These are
insurance policies that pay you while you are living, and include
disability insurance, critical illness insurance and long-term care
insurance. In this inaugural column and in future columns, I will
review different topics in detail.
United States, long term care insurance is a very popular product.
However, it is fairly new to the Canadian marketplace and is currently
offered by only a handful of insurers, although a few more companies
will be launching their product within the next few months. Few
Canadians know that they can purchase a long-term care policy from some
insurance companies, and even fewer own a policy.
Canadian population is aging, and we’re living longer. According to
Health Canada, seniors over age 65 are the fastest growing population
group in the country. Aging baby boomers are looking for ways to
preserve their assets for their retirement and their heirs, while
worrying about who will look after them (and pay the bills) if and when
they get sick. There are currently long waiting lists for good long
term care facilities, and many would like the option of being cared for
at home. But private nursing, professional caregiving, and home
modifications cost money. Many people are reluctant to sell an asset
(the house or the cottage) or to use their retirement income or savings
to pay the bills. Long term care insurance may be the solution.
product is designed to provide benefits to people who require either
facility or home care on a long term basis. Most plans can be purchased
after the age of 30. All benefits are tax free.
term care insurance can be purchased by applying for a monthly benefit,
such as $100 a day (equivalent to $3000/month – which would cover the
cost of an average long term care facility today). For most plans you
can purchase anywhere from $10.00 to $300.00 a day. You can have the
benefit paid for 1 year, 2 years, 5 years or your lifetime. You choose
this at time of application. The premiums are paid for a set amount of
time depending on the contract. You must satisfy an elimination period
before you receive benefits. You can choose an elimination period of
nil, 30 days, 60 days, 90 days, or 120 days.
policies define their elimination period as calendar days; while others
will only use the days you actually received service/care towards
qualifying for your elimination period. Some contracts will pay the
daily benefit for you to use at your discretion, while others will want
to see receipts for the services and care rendered.
most contracts in Canada, premiums are level and only guaranteed for
the first 5 years of the contract. The insurance companies are
reserving the right to increase premiums later on. They are waiting to
see how sales go and what their claims experience will look like. Some
contracts do however put a cap on the maximum amount they can increase
your premiums over the life of the contract.
Long-term care insurance does require underwriting, so you must be in reasonable health to obtain coverage.
are several other features that are included in long-term care
insurance contracts. These will be addressed in future columns. This
particular column provides you with the framework from which long term
care insurance is created and to give you an idea of how a contract
works and what type of coverage you are purchasing.
term care insurance should be a key component in your retirement plan.
It will provide you with tax free dollars in the event you require home
care or facility care, so you are not exhausting your other financial
resources. This is lifestyle protection.