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Long Term Care Insurance – Lifetime Protection For When You Can’t Protect Yourself

Although I had about 57 other topics in mind for this blog, sometimes events take on a life of their own.  Mere moments before I was set to begin the creative process, I received some information from a friend in the field about significant changes to the Sun Life Long Term Care (“LTC”) coming as soon as September.  In my world, “significant changes” is insurance-speak for a reduction in features or an increase in premiums.  As RBC is no longer in the LTC market and one of Sun Life’s other competitors has recently increased its premiums by around 15%, it appears even more likely that these coming changes will not make customers smile.  As a result, I thought I’d better pass along some information about LTC so anyone on the fence or unaware of this product could take advantage of the current product while they still have the chance.

In way of introduction, LTC is an insurance product that pays out weekly (although the cheques usually come once a month) if your doctor agrees that can’t perform any 2 of the 6 functions of daily living without substantial assistance or without somebody to keep an eye on you.  These functions include eating, dressing, bathing, toileting, moving and continence.  You can also qualify if you are cognitively impaired.  Like most insurances, you can decide the amount of benefit you want to purchase.

Although I don’t sell insurance and will defer to the expertise of the people that do, I like the Sun Life product because it has a feature that allows you to pay for a lifetime’s worth of premiums over 20 years, with 5 year rate guarantees along the way.  As well, you don’t have to submit receipts for expenses; if you qualify, the money is yours to spend anyway you like, such as hiring care workers, making your home more accessible or moving into a private care facility.  This product also waives premium payments when you are on claim.  Moreover, for many people, they can continue to collect benefits indefinitely for as long as they qualify.  All of this sounds pretty good to me.  In fact, I think that the money Sun Life must be paying out in claims is one of the reasons why changes appear to be coming.

If you are thinking about LTC, here a few more things to consider:

  • It becomes increasingly hard to qualify and expensive as you age.  As a result, I encourage people in their 40’s or younger to look at this product.  Not only will it be cheaper and easier to get than for older folks, but they can hopefully have it paid off for life before they retire so they can redirect their money towards green fees or trips abroad;
  • Although people think, “nursing homes” and “octogenarians” when they learn about the product, it is really something people of any age can consider.  I like it as a solution for stay-at-home parents or self-employed people who will not be able to obtain enough disability insurance (which is capped by a percentage of your work income);
  • LTC can be used to supplement or instead of disability coverage, although the payout conditions are different; just because you can’t work doesn’t mean you’ll also get LTC benefits.   For example, stress leave is not covered.  As well, being injured enough to miss work may not be the same thing as being unable to perform any of the 6 functions of daily living.  On the other hand, LTC payments don’t stop at age 65, unlike most disability policies;
  • LTC is evaluated differently from life and critical illness insurance, since insurers don’t care that much about how long you will live but how self sufficient you’ll be along the way.  Accordingly, someone who can’t get life insurance or critical illness insurance might still qualify for LTC.  Unfortunately, the reverse is also true; qualifying for life insurance is no guarantee that you’ll be able to get LTC.  On the bright side for those of the male gender, your premiums are generally less than those of the fairer sex; you are not expected to live as long, which means less risk to the insurers and lower costs for you; and
  • Some people use LTC as a way of protecting the size of their estate from the next generation even if they can self-insure.  Some might pay for a smaller LTC policy and self-insure for the rest;

Anyway, if any of the above sounds remotely appealing to you, other than the idea of travelling abroad, I suggest acting now before rates and options change.  If you don’t know anyone who sells this LTC, I am happy to pass along the names of some people who can provide you with more detailed information and rates, so don’t hesitate in contacting me.

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