Long Term Care Insurance in Canada, what is it?
Written by Cindy O’Donnell, BA, CHU, Licenced Advisor living in Ontario
Like many Canadians you probably have worked hard for your money and hope that when you retire you will have enough money saved to enjoy a decent retirement. If you are like most Canadians you know that the longer you live the higher your chances are of needing some kind of care either due to the aging process, illness or a disability. If you are already caring for aging parents you have probably been surprised at the cost of care and what is and isn’t covered by the government or your health plan. So what happens if this happens to you, will your family be able to care for you; do you have enough money saved? If not, you might what to learn more about Long Term Care Insurance.
Long Term Care Insurance is a fairly new type of insurance in Canada. It is intended to pay for expenses incurred as a result of some form of disability. This type of insurance will pay for some or all of your long term care needs, depending on the coverage selected. Long term care may be needed at home, in a facility setting and may be for a short period of time or your lifetime. Most importantly the benefit amount that you would receive is tax free.
If you want to stay independent, keep your dignity and choose the type of care you want, then this type of insurance is something you may want to consider. If you have significant assets and income and you want to protect some of them, this insurance could help do just that. There are only a few insurance companies in Canada that offer this type of insurance and right now these policies are not standardized so price and type of insurance coverage vary. This is why it is important that you do your due diligence in researching this type of insurance. Things you should look for when researching this type of insurance are how do the benefits pay out (are they just for home care, facility or both), do you have to show receipts for care, can premiums increase, what are the benefit triggers (this is extremely important to know), and what are the elimination or waiting period for benefits to begin.
Is this insurance expensive? Depends on how you define expensive. In most cases it is cost effective, since the cost of care is on the rise. Policy premiums are based on your gender, and age. The younger you are when you purchase the lower the premium. By delaying purchasing long term care until your older you may run the risk of your health changing and you may become uninsurable. The costs vary depending on the benefit amount you choose and the type of plan you choose. When choosing a plan don’t base your decision on cost alone, judge the value of the policy benefits a few extra premium dollars may prove to be money well spent.