Is Long Term Care Insurance Something You Should be Thinking About?

August 10, 2015 Ian Hull Elder Law Insurance Issues Tags: , , , , , 0 Comments

Last week, Suzana’s blog post discussed longevity planning and Powers of Attorney for Personal Care (POA PC). She mentioned that, while financial and estate plans tend to focus on assets, a longevity plan or a POA PC is important in order to address other issues such as quality of life planning and health care instructions. Long-term care insurance is one instance where these plans overlap.

As life expectancy increases, planning for retirement becomes more important. The possibility that you may have health care or long-term care expenses later in life is becoming increasingly likely. Long-term care could include in-home care or moving into a long-term care facility, both of which come with high costs.

As one article, Do you need long-term care insurance?, posted on MoneySense.ca points out, long-term care insurance is more common in the U.S. than in Canada. However, although some costs for long-term care may be publicly funded in Canada, most such expenses will need to be paid for by the individual. Thus, there are several options to choose from when considering how to fund long-term care:

  • Save for retirement in amounts sufficient to cover any expenses which may arise;
  • Rely on your children or other family members to contribute financially; or
  • Purchase long-term care insurance

To illustrate the importance of thinking about how to fund possible long-term care, consider the example of a couple, one of whom becomes ill and requires long-term care in a facility. After funding this care, the other partner may be left with very few financial resources to pay for their own retirement or long-term care costs further down the road.

However, if you wait too long to purchase long-term care insurance, the premiums may be more expensive than you would like and could turn insurance into a non-viable option. This leads us back to the importance of planning. Whether you decide to purchase insurance, or save to cover any eventual expenses yourself, it is vital to plan ahead and keep in mind that the amount you may require during retirement may be greater than you expect, especially if you or your partner end up requiring care later in life.

Thank you for reading.

Ian Hull

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