Samantha is a 62-year-old key account manager for a national
manufacturing company. Financially speaking, Samantha and her
husband have been doing well. They have fairly good salaries that
afford them a few personal luxuries and trips throughout the year.
Recently, Samantha's husband George was diagnosed with
Parkinson's disease. This news has Samantha worrying about the
care George will need and the strain this will place on their
modest savings account and her earnings.
Many take for granted the good health they are currently
experiencing, failing to realize that their health may not always
follow them into their senior years. Thanks to advancements in
medical research and the availability of treatments, people are
living longer. Yet, as one ages, his health begins to decline.
People like George will often require homecare or 24-hour nursing
care provided by a long-term care facility.
What seems to be emerging as a certainty is that our ageing
population, at some point, will require long-term care. The
question then is, when will we pay for this care – now,
later or a combination of the two? We are faced with increasing
government deficits that have resulted in big spending cuts to
health care services. Add to this the fact that health care
services are in shorter supply and treatment costs are on the rise.
All this equates to growing uncertainty for the well-being of
seniors and disabled people.
Without government assistance, many are questioning what other
options are available. Long-term care insurance (LTCI) is a large
piece of the puzzle. Generally, LTCI and insurance coverage should
not be thought of in isolation but be considered as components of
your overall financial and estate plan.
Why might you consider LTCI? By purchasing a policy, you not
only accrue funds that would later cover long-term care costs but
also preserve a portion of your money that can be put towards the
cost of taxes payable on death, building an inheritance for your
children and wealth preservation.
More specifically, if George had LTCIcoverage, his policy might
cover his residency in a nursing home or in a retirement home. He
might also have access to any of the following: home care, adult
care, respite care, and hospice care. Additionally, under his LTCI,
George may be covered, for activities of daily living and stand-by
assistance. All of these, can be very costly and can quickly
deplete through a person's and/or family's savings.
The average costs listed above were taken from a recent study
done by RBC Insurance, entitled "Long-term Care in Ontario
– 2010." These signify the financial burden that
residency in a long-term care facility might have on an individual
and their family members.
The figures stated above cover only basic care. If additional
services and care are required, and they often are, the costs of
these services are then added to those noted above.
In an illustration, Sun Life Financial provides coverage of
$1,000 per week (plus inflation adjustments) and charges premiums
of approximately $4,800 per year over a 20-year span for a
62-year-old male. For a female of the same age, the same policy is
$7,900 a year. The insurance premiums are payable for the 20 years,
so long as the insured person continues to meet their eligibility
criteria. The premium payments stop once the benefits from the
LTCI is a vast and complex area, where it is easy to make costly
mistakes. Deciding on an insurance policy can be frustrating and
confusing when handled alone. LTCI premiums differ from one
insurance company to another, and it is important to note that each
policy differs in coverage and costs, depending on the type of
policy the insurer provides. Therefore, it is important to consult
with a professional who will help you determine the policy that is
best for you.
If you would like more information on LTCI or financial and
estate planning, please contact the writer or another member of
SuRE (Succession, Retirement and Estate Planning) Services Group.
Contact information can be found on our website.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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