What is Long Term Care Insurance?
Long-term care insurance provides the insured with a weekly tax-free benefit in case they need help with two of the six activities of daily living – namely getting dressed, going to the bathroom, bathing, eating, maintaining continence and moving (for example, from a bed to a chair) – although the exact list depends on each individual policy.
The coverage is designed to ease the burden of two generations — your children, who would have to set aside extra resources to care for you, as well as you, who would otherwise have to tap into your savings. Unlike life insurance, most long-term care plans usually do not offer a discount to non-smokers, nor do they differentiate between male and female applicants.
How do you choose your long-term care insurance?
Here’s what to look for when choosing this type of insurance:
1. Make sure you understand everything, including the policy exceptions about how and when you get cover.
2. Choose how much income you need to pay for your long-term care and for how long. Your broker can help you estimate.
3. Inquire about any riders of interest to you.
4. Compare offers from insurers.
As for individual companies, you can purchase this type of insurance from the Ontario Medical Association/Sun Life Insurance, Penncorp Insurance Company, Manulife, Desjardins, RBC Insurance, and Blue Cross. We’ll take a quick look at a handful of them now.
The Ontario Medical Association (OMA) provides long-term care insurance to clients and their dependents ages 21 to 80. The policy is actually underwritten by Sun Life Financial. The costs are identical to those of Sun Life. The plan has a five-year rolling premium guarantee and offers a zero elimination period for facility care. The policy is receipt-based and men receive cheaper premiums.
Penncorp Insurance’s One Step Long-term Care Plan pays out as soon as the client has a disability, including cognitive impairment, allowing the client to benefit from the best possible coverage. This is the specialty of the policy in Canada. Penncorp’s One Step Long-term Care Plan is open to applicants ages 30 to 70. However, there is no premium guarantee on the premium of the plan.
Manulife Financial focuses on simplicity. All an applicant needs to do is fill out an application form and participate in an interview – by phone if he or she is under 70, and in person if he or she is over 70. If you are 71 or older, a doctor may be contacted to verify additional medical information. As a rule, Manulife almost never requires lab tests as part of their long-term care application process. The policy is not receipt based and has an elimination period that starts at 90 days.
At Desjardins, the rates are slightly more expensive than those of the competition. You can use the money however you want and you don’t have to provide proof of payment. Premiums are guaranteed for the first five years and favor men.
As you can see, the range is quite large and therefore it can be difficult to keep track of all products. That’s why I highly recommend working with an experienced life insurance broker who is well versed in this field.