Individuals & Families

Long Term Care Insurance

Are you going to need long term care? Will you be able to receive care in your home or will you be in a long term care facility? Either way, how will you pay for it?

Now imagine that you had a way to cover the cost of care -- and you could do it for 80% less. Wouldn't that give you the freedom and peace of mind to really go out and live your life? Long Term Care Insurance can do just that.

With Long Term Care Insurance, you pay a monthly premium while you're younger -- in your 50's is a great time to start looking at it because of lesser rates and ability to qualify (although it is possible to get later in life as well). When you can no longer perform at least two out of six Activities of Daily Living, your insurance starts to pay out as a monthly amount. (These are Bathing, Dressing, Eating, Toileting, Transferring, and Mobility.) Depending on your coverage, this will pay for either a fixed period of time (eg. 5 years), or for the rest of your life.

Question: What is the likelihood I'll actually need this insurance?

Answer: Higher than you think -- 720 in 1200 Canadians will need a long term care facility. If that doesn't seem that high, compare it to the common things that people usually buy insurance for:

Question: How much is living in a long term care facility going to cost me?

Answer: It's tough to know right now, but consider these stats:

• Right now there are about 490,000 seniors living in Alberta. And about 10,500 assisted living units (long term care facilities).
• By 2025 -- less than 10 years away, it's expected that there will be 763,000 seniors living in Alberta -- a 64% increase.
• The average cost of an assisted living unit right now is about $2900 / month -- and that's for basic care, not memory care or other more expensive supports
• assisted living units are not being built at nearly the rate that the seniors population is growing

What does all this mean? Low supply and high demand means that it's reasonable to foresee a dramatic rise in cost for long term care facilities.

Question: What does Long Term Care Insurance cost?

Answer: Rates will depend on your age, your gender, the waiting period before your claim starts (30 days, 90 days, etc.) and how long you want it to pay out. As an example, a 60 year old female getting a $2,000 / month benefit might pay about $162 / month. If she went on claim 10 years later she would have paid about $19,400 in premiums. But if she stayed on claim for 5 years, the cost of care would be $120,000. She'd be getting back five times what she paid. And she'd have gotten her money back in the first 10 months.

Question: Why should I get this insurance?

Answer: Because it means that you'll have a big part of your "what if" covered. You'll be taking away a big unknown, and giving yourself the freedom to go out and enjoy more of your savings while you're still active!

As well, if you have parents who could be facing care in the future, this can even be one way that you can help them to pay for their care at a fraction of the cost -- preserving their cash flow and their estate.