Do you need long-term care insurance?

Thanks to modern health care, people are living longer than ever, which means that you should consider long-term insurance to protect you financially.

Canadians aged 65 today can expect to live, on average, another 20.5 years according to the Canadian Human Mortality Database at the University of Montreal, and these may not be healthy years. Researchers at McGill University state that eight per cent of people over 65 have some form of dementia, and the risk of developing Alzheimer's nearly doubles every five years; the Heart and Stroke Foundation says that, after age 55, the risk of stroke doubles every 10 years. Combine the immutable facts of aging and diminishing health, and it becomes apparent that many Canadians are going to need long-term care in their later years.

The increased length of life alone means that retirement savings have to be stretched farther than in the past. It's not uncommon for retirement calculators to use the age of 90 when making income projections.

Long-term care services are not provided under the Canada Health Act. Provincial or local help may be available, but it is limited and not assured. The estimated cost of a semi-private room in a long-term care facility is $20,000 a year. Even in-home services, such as housekeeping and personal care, add up, not to mention medication, physical and occupational therapy or medical equipment. If you are faced with these costs, your payment options are usually either relying on family or drawing more money from your retirement savings.

Not everyone has family willing or able to help out, and often elderly people don't want to impose such a cost on their loved ones. If they have saved enough money to cover these expenses without bankrupting themselves or leaving the surviving spouse in dire financial straits, then they have no worries. If their retirement savings are just enough to cover regular expenses, then long-term care insurance might be the best solution. People considering this purchase should do so long before they might need it. The older and more unhealthy the applicant, the more costly the insurance premium will be.

Long-term care should be taken into consideration as part of any retirement plan. Everyone's circumstances are different, so take your income and savings into account as well as your prediction of health and family support. Depending on your resources, you may choose to set aside extra money in your savings to cover long-term care costs, or you might find purchasing insurance is a better choice for you.