Wealth Strategies: Long term care insurance

Long Term Care Insurance

Long term care insurance* is a relatively new product on the insurance shelf, but has certainly arisen as a result of our aging Canadian population. Our family dynamics aren’t what they once were, whereby family members were able to care for each other when they required assistance whether it was a spouse, sibling, child, grandchild, etc. Some households remain “single-person” due to divorce, family members are geographically spread out, and some are dual income households whereby both people are employed full-time. All of these scenarios and more have resulted in a much larger demand from those requiring assistance and care.

Long term care insurance essentially provides a weekly or monthly benefit whereby you determine the type of care, either at home or a care facility. To qualify for the insurance to take effect, one must either be unable to perform several activities of daily living (ADL’s) such as bathing, toileting and transferring, or have a cognitive impairment such as Alzheimer’s or dementia. There are several different waiting period time frames to choose from, after which the benefit would be paid (i.e. 30, 60, or 90 days). The insurance premium will therefore reflect the time frame of the coverage chosen as well as the term of the policy, with several options available depending on the insurer.

Currently in Canada, there is a more than 4 in 10 chance of having to reside at a care facility at some point in one’s life. And for those over the age of 65, there is a more than 43% chance that they’ll reside at a care facility for 3-5 years. Even more astonishing is that for couples over the age of 65, there is a more than 67% chance that one or both will require a care facility or assistance at some point. Unfortunately, wait lists for subsidized care facilities are quite lengthy at this time and more and more people have to look to home care as a result. Thankfully, long term care insurance provides the option of choosing a care facility or at home care.