One type of living benefit insurance that many Canadians are not aware of is Long-Term Care (“LTC”) insurance. Simply put, it pays the insured a monthly benefit if they are no longer able to live independently. In this article, I will dive a little deeper into the particulars of LTC insurance and why it can play an integral role in the lives of Canadians.
First, let’s look at the wording mentioned above: “no longer able to live independently.” This is determined through the 6 main activities of daily living (“ADL”), which include the following:
To be deemed no longer independent, the insured must be unable to complete TWO or more of the activities of daily living on their own. Additionally, some LTC contracts also include cognitive impairment as a separate qualifier for determining eligibility for an LTC benefit.
The insurance benefit is received tax-free and does NOT need to be used to cover specific expenses or put towards corresponding receipts. This benefit can be used however the insured (or their Power of Attorney/caregiver) sees fit.
When applying for LTC insurance, the policy owner has a variety of options to tweak and choose from, such as monthly insurance benefit, length of time premiums are required for, and whether the benefit will be indexed to inflation (among other features). As imagined, these variables will impact the cost, so it is important for the policy owner to customize a policy that meets their long-term objectives and budget.
The true value of this insurance is in two areas:
- Control; and
- Peace of mind.
With LTC insurance, the insured does not need to rely on government subsidies and be forced into a care home out of necessity. With the future influx of baby boomers into long-term care homes, the availability of beds will become less and less. For those needing government assistance, as many do, the circumstances may result in being relocated to a care home far away from your loved ones. LTC insurance allows the insured to choose how they want to enjoy their golden years. Perhaps that is equipping their house with modifications so they can remain at home, or instead of moving into a care home, they can use the insurance benefit to bring in a full-time caregiver. Relying on government subsidies is not a desirable situation due to a loss of control – this is what LTC insurance provides.
When it comes to peace of mind, consider a situation where an individual is now in a care home, paying $6,000 per month or more (assuming they do not qualify for any government assistance). This can lead to stress and anxiety, knowing they are depleting their savings on a rapid basis. With LTC insurance, the income keepd coming in, helping to reduce or eliminate the monthly deficit and offer peace of mind that their savings will not run out.
To receive more information on long-term care insurance or to get started on an application, please contact us.