Is Long Term Care Insurance Worth It?

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Alexandre Desoutter updated on 17 October 2023

Planning for retirement is a comprehensive process, making sure you and your family have well-deserved care after decades of working. As you age, however, you may find that the cost of care could exceed your savings. That's where long term care insurance comes in.

Today, Canadians are increasingly opting for private long term care insurance (LTC) to ensure specialised nursing and health care coverage. But how do you know if it's right for you?

In this guide, we'll explore the in and out of long term care insurance, its pros and cons, how to obtain it, and why it could be essential in safeguarding your independence and financial security during you retirement.

5 Key takeaways on Long-term care insurance

  1. Long-term care insurance supplements healthcare support in ageing, or during chronic illnesses.
  2. It covers in-home care, nursing, and rehabilitation expenses.
  3. LTC protects retirement savings, ensures quality care and independence.
  4. Consider purchasing an LTC policy early for cost savings and eligibility.
  5. There is an evaluation and waiting period before long term care insurance benefits are paid.

What is long term care insurance?

Long-term care insurance, sometimes also called LTC insurance, is designed to help you and your loved ones cover the costs of supplementary health support that may become necessary as you age.

If, for example, you experienced decreased mobility later in life and need assistance with day-to-day personal care, LTC insurance can ensure that you’re able to hire the help that you need.

LTC insurance also enables those living with chronic illness or recovering from an injury to receive the support they need to maintain independence and quality of life.

Is long term care insurance worth it in Canada?

The worth of this insurance varies based on your individual needs. However, it is important to note that it offers peace of mind, protects savings, and enables independence in case of extended care requirements.

However, premiums can be unpredictable, and existing insurance coverage may overlap, impacting the decision. Assess personal circumstances and consult a financial advisor for a tailored approach.

Good to know

Is there federal government long term care insurance? The Canadian federal government does not offer a specific longterm care program. LTC services are primarily provided by provinces and territories, while the federal government supports healthcare funding through the Canada Health Transfer. Individuals seeking long-term care insurance should consider private coverage options provided by various companies.

Therefore, we highly recommend that you consider a private health insurance plan that you can customise for you long term care needs. You could start by comparing prices, coverage, and get quotes to buy the best long term care insurance coverage you need.

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Who needs long term care insurance?

Arguably, anyone can benefit from LTC. For some, however, securing coverage for additional health and living support later in life may be more important than for others. Here are a few examples of how LTC can come handy.

  • At age 45, Michael manages his diabetes with a combination of a sensible diet, regular exercise and metformin. He’s aware, however, that he may require more intensive treatment as he ages, including regular injections, as well as in-home support to prevent falls or other injuries caused by low blood sugar. LTC will make sure he's supported here.
  • Camille, a widow, wants to remain in her own home as she ages without imposing a financial or personal burden on Catherine, her only daughter. LTC insurance will cover the cost of daily care assistance, allowing Camille to focus on enjoying time with family.
  • Richard, aged 35, has been living in a group home for people with developmental disabilities. His parents, Luke and Emma, want to ensure that he continues to receive the same standard of support once they are unable to provide for him directly. Either a long-term care insurance policy or a disability insurance policy will protect Richard’s quality of life.

Good to know

Regardless of whether you anticipate the need for additional care as you age, an LTC insurance policy safeguards your quality of life while protecting loved ones from financial surprises.

It is worth noting that the annual cost of in-home healthcare can easily exceed $50 000 per year. Purchasing private long-term care insurance ensures that you maintain your independence without depleting your retirement savings or limiting your options.

What does long term care insurance cover?

In addition to home healthcare, including round-the-clock nursing, your LTC benefits can bridge the gap between the cost of a nursing home and provincial healthcare benefits.

Comprehensive policies may also include coverage for adult day care, assisted living, occupational therapy, rehabilitation and daytime assistance with personal care tasks, such as bathing, dressing, eating and toileting.

Your long-term care insurance policy can also protect you in case of an accident or serious illness that prevents you from working for more than 90 days. Instead of draining your savings to pay for supplemental healthcare or therapy, you’ll use the tax-free benefit paid by your insurer to cover these costs.

Watch out!

LTC benefits cannot be used to compensate family members for time or expenses associated with in-home care.

Pros of LTC

  • Peace of mind for you and your loved ones
  • Protects your retirement savings and legacy
  • Almost all adults will require long-term care at some point
  • Income-style plans allow you to spend funds on whatever you choose

Cons of LTC

  • Uncertainty in pricing and unpredictable premiums
  • Difficulty predicting the right amount of coverage to purchase
  • Extended waiting periods may delay the payment of benefits

How much does long term care insurance cost?

Long-term care insurance costs on average for a 55-year-old man range between $59 and $72 per month, and $66 and $88 per month for a 55-year-old woman.

The cost depends on a number of factors, including your age, overall level of health and province of residence when you apply.

Because different provinces provide different levels of financial support due to individualised pension and benefit schemes, the cost of long-term health insurance in Ontario may exceed the cost of a similar policy in Alberta.

Other elements that may affect the cost of LTC policies include:

  • The amount of coverage you purchase
  • The number of options you choose
  • The length of the waiting period between your request for benefits and payments
  • The length of time covered by your policy

When to buy long-term care insurance?

Purchasing LTC insurance earlier rather than later can add up to significant savings in your premiums. Financial planning experts recommend that your LTC policy costs shouldn’t exceed more than 5% of your monthly income - a ratio that’s much easier to achieve when you buy your policy while still actively working.

And while we tend to think of LTC insurance as a concern for those 55 and older, accidents and debilitating illnesses can strike at any age. Be aware that waiting to purchase an LTC policy in Canada may prevent you from buying a policy at all.

Most LTC companies will not allow you to purchase a policy if you currently cannot perform two or more qualifying daily activities listed in the policy, such as dressing, eating or toileting.

Good to know

Speak to a certified financial planner to learn more about how LTC private policies can protect you and your dependents.

How does long-term care insurance work?

Generally speaking, Canadian long-term care follows one of two models: Income-style benefit plans and reimbursement style benefit plans.

What is income-style LTC?

Income-style benefit plans will pay out a pre-set benefit amount every month for a set period. These funds can be used however you wish, provided you use the money to support your care. Most insurers cap the length of time you can receive these payments at two years. Long-term care insurance benefits are tax-free in Canada.

What is reimbursement-style LTC?

Reimbursement-style plans operate more like typical insurance policies. Provided the care you need falls within the list of qualifying services in your long-term care policy, you will receive reimbursement for those costs. Most insurers cap the amount for which you can receive reimbursement.

Be aware that all long-term care insurance policies will contain a “waiting” or “elimination” period of anywhere from 30 to 90 days.

Once you make a claim against your policy, your insurer will perform an evaluation to confirm your need for care. Following confirmation, you will begin receiving payments and reimbursement once the waiting period has lapsed.

How to choose long-term care insurance?

When deciding which long-term care policy to purchase, you’ll want to take into account a number of considerations.

Good to know

Do you already carry disability or critical illness insurance? In that case, you may be able to add long-term care insurance without purchasing a separate policy.

What kind of care do you think you’ll need? If you know you have funds for assisted living or at-home nursing care, you may want to focus on policies that reimburse specific kinds of health support, therapies or rehab.

How much have you saved for retirement? If your primary goal in purchasing LTC coverage is protecting your savings and legacy, pay close attention to waiting periods. Longer elimination times can draw down your nest egg.

Good to know

Insurance providers may offer different deals depending on your home province. For example, there may be different deals for LTC in Ontario than there are in Manitoba! Use the tool below to see how providers vary their offers between provinces:

Where to buy long-term care insurance?

To get long-term care insurance in Canada, you’ll need to work with a private company directly or purchase through a broker. In many cases, you may not purchase a stand-alone LTC insurance policy, but a rider to supplement to critical illness or disability insurance.

Here are some companies that sell LTC policies:

Sun Life long term care insurance, RBC long term care insurance, as well as Manulife long term care insurance, for example, can be purchased as an add-on in the form of a rider. In these cases, you’ll need to satisfy the criteria of the underlying policy to receive a benefit, as well as any additional conditions set out in the rider.

5 ways to get cheapest long term care Canada insurance

  1. Compare Quotes: Obtain quotes from multiple insurance providers in Canada to compare premiums and coverage options using HelloSafe comparator at the end of this page.
  2. Consider Coverage Needs: Choose a policy that aligns with your specific long-term care needs, avoiding unnecessary extras that can increase costs.
  3. Buy Early: Purchasing long-term care insurance at a younger age can result in lower premiums due to better health and reduced risk.
  4. Opt for Shared Coverage: If applicable, consider shared policies with a spouse or partner to potentially lower overall premiums.
  5. Health and Lifestyle: Maintaining good health habits and managing chronic conditions can positively impact insurance rates, potentially making coverage more affordable.

If you'd like to compare the best health insurance policies and the long term care coverages they offer, you can use our comparator below and get the best deals to suit your needs. All you need to do is fill in what you need and get quotes in no time.

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Alexandre Desoutter

Alexandre Desoutter has been working as editor-in-chief and head of press relations at HelloSafe since June 2020. A graduate of Sciences Po Grenoble, he worked as a journalist for several years in French media, and continues to collaborate as a as a contributor to several publications.