Long Term Care Insurance

By Cheri Crause


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What are your insurance odds? Perhaps it's an odd question, but playing the odds is exactly what insurance companies are in the business of. So let's look at some statistics put forth by the Canadian Academy of Senior Advisors. First, chances are 1 in 1,200 that you'll make a claim against your house insurance policy in a given year. Chances are 1 in 240 that you'll make a claim against your car insurance policy in any year. But the odds are 1 in 3 you'll make a claim against your long term care insurance during the life of that policy!

Given these odds, why do so few people have this type of insurance? There are four primary reasons. Cost is a deterrent, people want to wait for better policies, they are confused by the myriad of choices, or they don't believe they will be affected.

Yet an estimated one in three Canadian families will face long term care issues in the future. Most long term care will take place in private homes, rather than nursing homes or assisted living facilities, and the majority of the costs associated will be borne by families like yours, not the government. Given the average length of long term care is eight years, does your family have the financial resources to pay for these costs?

Historically, many Canadians have expected the government to provide for their care, yet 72% of us believe services for the elderly will be the greatest challenge facing provincial governments 10 years from now. The basic out-of-pocket expense for a care home (with government subsidization) is currently $2,480 per month or $29,760 per year. These are after-tax dollars, and could reach $230,080 of your family's savings over the average 8 year period of care.

According to Patty Randall, a C.S.A. instructor and family caregiver for both her parents, the first 5 years of her parents' care cost her family over 200,000 in after tax dollars. She is now an emphatic, outspoken advocate for Long Term Care insurance.

LTC insurance can be purchased by anyone between the ages of 40 and 80. As you might expect, it is considerably cheaper at younger ages, and for healthier people. The most enthusiastic purchasers seem to be family caregivers and members of the medical community who are face to face with the costs of care every day.

Long term care insurance pays a daily benefit to cover services and support required to maintain your day to day activities (known as activities of daily living, or ADL's) should a chronic illness or cognitive impairment prevent you from taking care of yourself. Benefits of this type of insurance are tax free.

Finally, most seniors are concerned about being able to remain in their own home. Long term care insurance helps defray the costs of care which might otherwise force you to downsize or move into a facility prematurely. To find out if LTC insurance is for you, first see how it can be tailored to your individual needs, have your insurance professional calculate the costs as a percentage of your total disposable assets, and determine how long your assets would last if you needed long term care. Odds are good you'll be glad you inquired further.

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