With longer life expectancies, a large ageing population that is placing increasing demands on our healthcare system, rising healthcare costs and a dwindling tax base, Canadians need to plan seriously for their retirement health care. While no one knows what the state of the health care system will be in the future, experts agree that the health care system is becoming more restrictive in both the range and depth of services it will provide. Of particular concern is the impact of having responsibility of long term health care increasingly transferred from a health care system poorly equipped to fund the cost to those individuals who require it. The cost of nursing home care for example is being increasingly born by those having the financial means to pay. It is only when an individual has sufficiently drawn down their savings or can demonstrate a certain poverty level that there will be financial assistance from the health care system. Furthermore, it is likely that in the future the care provided by the government may not be sufficient to maintain the quality of your life and provide you with the level of care you require. Private funding solutions will be needed.
While many depend on extended heath care plans for their healthcare needs, these plans do not provide the required funding for long term care as they tend to reduce or terminate their benefits at age 65. Furthermore, many will not pay for services such as homemaking, personal care and semi-private accommodations in a long term care facility. Long term care insurance is a relatively new type of health care coverage and is designed to provide funding for health care costs associated with long term care. These include adult day care, respite care or nursing home care that may be needed as a result of a prolonged illness, disability or old age. Long term health care insurance ensures that your assets will not be depleted to pay for your health care. It will also enable you to maximize the care options available to you beyond those provided by the public health care system. This type of insurance is becoming more popular with the increases in health care costs and with families having less space and time to care for older relatives.
If you are considering long term care insurance, be aware that services covered under private insurance policies vary greatly. Each policy has its own eligibility requirements, restrictions, costs and benefits. In trying to determine the need for long term care insurance, you should first look at your family's medical history. This form of health care insurance may be beneficial particularly if there is a family history of conditions such as Alzheimer's or senile dementia. If your relatives have passed on while in reasonable health you may want to buy a return of premium option which returns the premiums paid to the beneficiary in the event the insured dies prior to a claim being made.
Long term care insurance can help you take responsibility for the costs of your own long term care without having to rely on children, loved ones or friends who may be limited in their ability to help you if they live in another city, work full time or if their health declines in the future. It can also help to preserve an inheritance for your children and grandchildren. The benefit of long term care insurance will really depend on your future health. While you may pay the premiums year after year and never need the coverage, a long term care policy can provide you with valuable peace of mind because it addresses both the financial and often emotional issues involved in funding your long term health care.
An independent professional financial planner may be of considerable assistance in determining the importance of long term care coverage in your situation. Darryl Prociuk CFP, R.F.P., CLU, TEP is a Registered Financial Planner and may be contacted at [email protected].
The use of a financial professional is recommended. Darryl Prociuk CFP, R.F.P., CLU, TEP is a Registered Financial Planner and may be contacted at [email protected]
