Long-term care insurance not only helps finance part — or the entire — expense of staying in a private or semi-private long-term care facility, but can also provide a steady stream of income for nursing care or registered caregivers when the treatment is given in your home.
By John Archer, Special to The Gazette
MONTREAL — A recent Ipsos Reid survey released to coincide with the Canadian Medical Association’s Annual National Report Card on Health Care found the majority of Canadians are concerned with the availability of long-term care services in their senior years and how they are going to pay for those services. This came as no surprise to those of us in the financial services industry.
We would say that people might be downright terrified, as we have witnessed the dramatic erosion of a client’s net worth when virtually any form of long-term care is required. All I can say, from my experience, is that if you plan to get old and in need of care, you’d better be rich, have complete faith in future government services or … be insured.
“Insured? How’s that?” you might ask.
Long-term care insurance is a relative newcomer to the living-benefits insurance landscape — in other words, benefits that you collect while living. Unfortunately, it has not had the marketing that it should, given the results of this Ipsos Reid survey. However, it is readily available (for the medically insurable between the ages of 21 and 80) and at rates that generally make it accessible to most budgets.
A simple cost analysis of the premiums required versus the potential payback reveals that any premiums paid over 20 years would take less than two years to recoup once a person is on claim. Some plans even provide for a refund of the premiums, at death, if a claim is never paid. Money in the bank, as it were.
While the premiums are not tax deductible, the benefits when paid are not considered taxable.
Long-term care insurance not only helps finance part — or the entire — expense of staying in a private or semi-private long-term care facility, but can also provide a steady stream of income for nursing care or registered caregivers when the treatment is given in your home. Make no mistake: Even care at home can have you quickly run up a tab. Sure, your son or daughter might become your caregivers (if they live in town), but even so, if they are trying to keep down a job or raise a family, having supplemental caregivers to relieve the stress may well be required.
Furthermore, having the insurance in place can help you maintain your autonomy, privacy and dignity. In some cases, the younger generation will pay the long-term care insurance premiums for their parents’ policies in order to protect their own assets in the event a parent needs long-term financial support.
Many life insurance companies offer long-term care insurance as part of their suite of products. Benefit amounts are typically in the area of $50 to $300 per day ($1,500 to $9,000 per month). To select the benefit amount that’s suitable for you, you might want to familiarize yourself with the expenses of some of the long-term care facilities in your neighbourhood. Rates I commonly hear quoted range from $3,000 to $5,000 per month before you add on the bells and whistles. Even at-home nursing care, personal care and companions range from $13.50 to $65 per hour.
A quick survey of annual premiums for a $3,000 monthly benefit (following a 180-day waiting period) found they would be approximately $1,744 for a 55-year-old man and $2,458 for a woman of the same age. Sixty-year-old men would be looking at $2,361, and women of the same age would pay $3,400. Women are expected to live longer, which explains the higher premiums.
The return-of-premium option would be available at an additional cost, as would other enhancements, such as benefits indexed to inflation.
To apply for the coverage, contact your regular insurance provider, who would hopefully shop around and find you the best rate for the type of policy you are looking for. Medical evidence would have to be provided to ensure you are in good or insurable health, and a medical examination may be required as well.
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