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- Long-term care insurance (LTCI) helps cover costs for home care, assisted living, and nursing homes, reducing financial strain on individuals and families
- Most policies require you to need help with at least two Activities of Daily Living (ADLs) before benefits begin
- Premium costs vary based on age, health, and coverage options, with younger applicants typically securing lower rates
- LTCI provides financial protection against rising long-term care costs, ensuring access to quality care without exhausting personal savings
- What is the meaning of long-term care insurance?
- Why do people need long-term care insurance?
- How does long-term care insurance work?
- How to choose a long-term care insurance policy?
- What are the pros and cons of long-term care insurance?
- How much does long-term care insurance cost?
- What is the difference between long-term care insurance and life insurance?
- What is a long-term care annuity?
- When should you buy long-term care insurance?
- What is the oldest age for long-term care insurance?
- Which companies offer long-term care insurance?
- Frequently asked questions
As people age, the need for long-term care insurance increases due to chronic conditions, disabilities, or cognitive disorders. The cost of care, whether at home, in an assisted living facility, or in a nursing home, can be overwhelming.
Long-term care insurance (LTCI) helps cover these expenses to ensure that individuals receive the necessary care without depleting their savings. In this article, we’ll take you through what long-term insurance is, who needs it, and how it differs from other insurance products.
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What is the meaning of long-term care insurance?
Long-term care insurance is a type of health insurance policy that helps pay for the costs of extended care when you can no longer perform daily activities independently. It provides a set daily or monthly benefit to cover services such as home care, nursing home stays, or assisted living.
As we age, the need for assistance with daily activities becomes more likely. Common reasons for requiring long-term care include:
- Degenerative diseases (e.g., Parkinson’s, ALS)
- Cognitive impairments (e.g., dementia, brain injuries)
- Serious illnesses (e.g., stroke, cancer)
- Physical disabilities caused by accidents or aging
While these situations may seem distant, planning ahead can help secure your future and protect your family from unexpected financial burdens.
What are activities of daily living?
Activities of Daily Living (ADLs) are any self-care activities including feeding yourself, dressing yourself, bathing yourself, using the restroom, moving independently (e.g., getting in and out of bed or a chair), and maintaining continence.
Most long-term care policies require that you need assistance with at least two or more ADLs before you can make a claim. However, eligibility requirements vary by insurer, so it’s important to review the specific terms to understand what qualifies as “dependent” living.
Why do people need long-term care insurance?
Long-term care insurance can be a critical financial planning tool, helping individuals and families manage the rising costs of extended care. Many people avoid thinking about the possibility of needing long-term care, but ignoring the issue doesn’t make it go away.
Nearly 74% of Canadians admit they have no financial plan to cover long-term care costs (Leger Marketing survey, CLHIA).
By getting LTCI insurance, you:
- Protect your savings from the high costs of care
- Ensure you have access to quality support when needed
- Reduce the financial and emotional burden on your loved ones
How does long-term care insurance work?
To qualify for benefits, policyholders typically need to demonstrate that they are unable to perform at least two out of six ADLs or have a cognitive impairment requiring supervision.
Here’s how LTCI generally works:
- Application process: Insurers assess health history, may review medical records, and sometimes require interviews before approval
- Premiums and coverage limits: After approval, policyholders pay regular premiums. Policies have a cap on daily payouts and a maximum lifetime benefit
- Reimbursement model: Most policies require individuals to pay for care upfront, and then submit receipts for reimbursement. Some plans, however, offer direct cash benefits
How to choose a long-term care insurance policy?
Choosing the right long-term care insurance (LTCI) includes considering factors like premium costs, waiting period, benefit duration, etc.
When selecting a plan, consider the following factors:
- Premium costs: You need to determine how much you can afford to pay for premiums while balancing your budget and long-term financial goals
- Benefit amount: Then, estimate how much coverage you’ll need to afford quality care. Decide whether you prefer a fixed monthly benefit or coverage per service
- Waiting period: Most policies include a waiting period (also called an elimination period) before benefits begin. Common options range from 30 to 90 days, but some policies offer zero waiting periods at a higher premium
- Benefit duration: Coverage can last for a set period (e.g., 2, 5, or 10 years) or provide lifetime benefits. While longer coverage costs more, it ensures you won’t run out of benefits when you need them most
- Inflation protection: The cost of care rises over time. Choosing a policy with inflation protection helps ensure your benefits keep up with increasing expenses
Selecting the right plan can be complex, but our expert insurance advisors can help. Our knowledgeable team works with leading insurance providers to find the best LTCI coverage for your needs. A simple phone call can get you started on securing your long-term care plan.
What are the pros and cons of long-term care insurance?
LTCI provides coverage for long-term care when you need it most, ensuring you receive assistance without placing a financial burden on your loved ones. Many policies allow you to choose between in-home care or facility-based care, giving you flexibility in how you receive support.
However, there are also challenges to consider, such as age restrictions, exclusions related to pre-existing conditions, waiting periods, etc. Additionally, you may require assistance with a single Activity of Daily Living (ADL) but won’t qualify for benefits until you need help with at least two ADLs.
Pros and cons of long-term care insurance
| Pros | Cons |
| Covers the cost of long-term care when you are most vulnerable | May have age restrictions (sometimes up to age 65) |
| Plans often allow you to choose between in-home care or facility-based care | Some pre-existing conditions may prevent you from getting coverage |
| Provides peace of mind, ensuring your children don’t have to pay for your care | Waiting periods may delay coverage when you need it |
| Helps protect your savings from the high costs of long-term care | You may need care for one ADL but won’t qualify until you need assistance with two |
How much does long-term care insurance cost?
Long-term care insurance typically costs around $100 per month, but the actual price depends on several factors, including:
- Your age at the time of application: The younger you are when you apply, the lower your premiums will be
- Your health status: Pre-existing conditions or medical history may affect eligibility and pricing
- The type and amount of coverage: More comprehensive plans with higher benefit amounts cost more
- The waiting period: Policies with shorter waiting periods before benefits begin tend to have higher premiums
Remember, while paying for LTCI now may seem expensive, the cost of long-term care itself can be significantly higher. Retirement home expenses range from $900 to $8,000 per month, depending on the level of care and facility type. Over time, that could mean spending more than $60,000 per year to cover just essential support.
What is the difference between long-term care insurance and life insurance?
Long-term care insurance (LTCI) and life insurance serve different financial purposes. Long-term care insurance covers the cost of care if you become unable to perform basic Activities of Daily Living (ADLs) such as feeding, bathing, or moving on your own. It helps pay for nurses, caregivers, and facilities required for your daily support.
Life insurance, on the other hand, provides a lump-sum payment to your beneficiaries after you pass away. Some policies include living benefits, allowing you to borrow against the policy’s value.
Certain insurers also offer long-term care riders, which let you use a portion of your death benefit to pay for care while you’re still alive.
What is a long-term care annuity?
A long-term care annuity is a financial product that combines investment growth with long-term care funding. You invest money into the annuity, and over time, it accumulates value. If you require long-term care due to aging or illness, you can use a portion of your annuity to cover those expenses.
However, withdrawing funds for care may reduce future payouts from the annuity. This option provides both a savings plan and a financial safety net for potential care needs.
When should you buy long-term care insurance?
The best time to purchase LTCI is as early as possible. The younger you are, the lower your premiums will be. Many insurers offer limited-pay plans, allowing you to pay for coverage upfront during your peak earning years.
For example, you might pay premiums for 10, 15, or 20 years and then receive coverage for the rest of your life. This approach can help secure affordable coverage while avoiding high premiums later in life.
What is the oldest age for long-term care insurance?
The maximum age to purchase long-term care insurance varies by insurer, but most companies set the cutoff between 75 and 80 years old. Some policies may allow applications beyond this range, but premiums become significantly higher, and approval is more difficult due to health risks.
Which companies offer long-term care insurance?
At PolicyAdvisor, we work with over 30 of Canada’s top insurance providers. While we don’t offer LTCI directly, we can connect you with one of our licensed partners to find the best insurance company for your needs.
Some of the top insurers offering long-term care insurance include:
- Sun Life
- Canada Life
- Manulife
- GMS
- RBC
Speak to one of our licensed insurance advisors today to explore your options and determine if a long-term care policy aligns with your financial goals!
Frequently asked questions
Does long-term care insurance cover pre-existing conditions?
Most LTCI policies do not cover pre-existing conditions immediately. Insurers may have a waiting period (e.g., 6 months to a year) before coverage applies to existing health issues. Some severe conditions may disqualify applicants altogether.
Can I buy long-term care insurance if I’m already retired?
Yes, you can apply for LTCI after retirement, but premiums will be higher, and approval may be harder if you have health conditions. Many insurers set age limits between 75 and 80 for new policies.
What happens if I never need long-term care?
Traditional LTCI is a use-it-or-lose-it policy, meaning you won’t get a payout if you never need care. However, some hybrid policies combine LTCI with life insurance or annuities, allowing you to use funds for care or pass them to your beneficiaries.
How long do long-term care insurance benefits last?
The duration of benefits depends on the policy. Some plans provide coverage for a set number of years (e.g., 2, 5, or 10 years), while others offer lifetime benefits. Longer benefit periods come with higher premiums.
Can I get long-term care insurance if I have a chronic illness?
Your eligibility while suffering from a chronic illness depends on the severity of the condition. Some insurers may still approve applicants with manageable chronic conditions, like controlled diabetes, but severe health issues (e.g., advanced Alzheimer’s or Parkinson’s) may lead to denial or higher premiums.
Long-term care insurance (LTCI) provides financial coverage for individuals who require extended care due to aging, chronic illness, or disability. It helps pay for services such as in-home care, assisted living, and nursing home stays, ensuring that policyholders receive necessary support without depleting their savings. The eligibility criteria for LTCI often depend on the inability to perform at least two Activities of Daily Living (ADLs), and policies vary in coverage amounts, waiting periods, and benefit durations. With long-term care costs rising, LTCI offers a proactive way to secure quality care while protecting financial assets.
