There is nothing worse than having bad health in old age. The older you are, the more you feel lonely and vulnerable. 

My grandparents are nearly 80 years old. They have many difficulties buying food, cooking, and daily activities. Even worse, it is hard for them to remember the names of their children. When going out and about, my grandparents may get lost without help. So, we decided to buy a long-term care insurance package for them from an insurance company.  

We are one of those families with good financial ability, so we can afford expensive premiums. But for other families who don’t have enough money, it’s a challenge for them. 

This is the general condition of the long-term care service and also one of the negative parts of long-term care insurance. This article provides you with some important information about long-term health care insurance, its pros and cons, so you can make a more informed decision about a suitable insurance package.

Some preliminary considerations about long-term care insurance

Before looking at the pros and cons of long-term care insurance, we need to answer the question: “What exactly is long-term care insurance?”

Long-term care insurance is defined as a type of insurance to provide you health services, but not including regular health services. Long-term care insurance is essential for people who are vulnerable such as the elderly, people with disabilities or cognitive impairment, etc. as they can not take care of themself. “Activities of daily living” is the type of long-term care commonly required. It includes all or some of the activities listed below:

Dressing.

● Bathing.

● Eating.

● Moving around.

● Toileting.

● Grooming.

Long term care insurance policies are normally required in lots of places, for example:

Nursing home. 

● Health care centers for the elders. 

● Your private home. 

According to the survey conducted by the CLHIA (Canadian Life and Health Insurance Association), three-quarters of Canadians (74 percent) admit that they have no consideration of long-term care insurance in the retirement situation. It is worth noting that a large number of Canadians misunderstand that long-term care facilities are fully supported by the government. However, this cost is mostly paid by your own pocket. Therefore, accessing and understanding clearly about long-term care insurance is an essential step to prepare for unpredictable risks. 

Purchasing long-term care insurance offers many benefits

● Reducing burden on your family: This can be understood as the inability to care due to different economic, physical, and time conditions. In detail, you are unable to take care of yourself as a result of a chronic illness, a disability, or a sudden accident. This leads to a need for assistance in daily living activities. Sometimes your family members live far away from each other. Hence, purchasing long-term care insurance can help solve all these problems quickly.

● Retirement account savings: When you retire, you may have a pension to pay for your daily activities. According to Changing Attitudes Toward Old Age, The Medical Journal of Australia says that: “A common myth is that aging and diseases are synonymous”. If you don’t have enough retirement pension for medicare, you may have a lot of pressure dealing with this. So long-term care insurance is an effective solution in case of an exhausting pension.  

● Peace of mind: Having long-term care makes you feel calm and not worried about the future. When you own long-term care insurance in particular or any type of insurance in general, you can work and enjoy your life more comfortably. 

● The flexibility benefits: Long-term care insurance can be chosen based on your personal needs. Many factors influence the buyer’s decision but “individual circumstances” and “retirement plans” are the two most influential. Similar to other types of insurance, your premium amount is calculated depending on your age, gender, state of health, and so on. Besides, the benefits such as inflation protection options and tax-free/ tax-deductible cash values are also some advantages worth noting of long-term care insurance. 

However, there are some caveats to long-term care insurance: 

● It can be quite expensive: It may not be a great choice for those who want to join this policy with a low income. Therefore, we don’t encourage you to buy long-term care insurance if you have limited financial resources and find it hard to pay your current cost of living. According to a report, the premiums of long-term care insurance for a 45-year-old person can be approximately 50$/month, but for 65 year-olds, it can reach up to 200$/month.  
However, in Canada, most Canadians do not realize their need to buy long-term care insurance until their old age with deteriorating health conditions. This is the reason why the long-term care coverage amount is usually high. 

● Having no benefits needed: This is a common matter in the insurance sector. You buy long-term care insurance to protect you from future risks. However, if that risk does not happen, you might face another risk known as “throwing your money around”. 

● The premium amount not covered: The health care inflation in Canada can affect your long-term care insurance premiums. This disadvantage mainly comes from its flexibility. 

According to the report “Health care costs are on the rise in Canada and COVID-19 is a new cost driver” - the Conference of Canada (October 30, 2020), Greg Hermus - the principal economist emphasized: “... health care costs are projected to increase dramatically from a combination of traditional factors, including population growth, population aging, and inflation along with new financial pressures stemming from the COVID-19 pandemic”. It can lead to a higher rate of inflation.

Whether to buy long-term care insurance?

There is no answer, isn’t it? 

Buying long-term insurance depends on the needs of each person. Also, it depends on your finances, work, health, age, and more. However, if possible, we encourage you to purchase long-term care insurance, insurance companies will have policies to protect you from unnecessary risks. Despite its drawbacks, long-term care insurance clears your worries and helps you preserve your account.