Long-term care insurance gets a wake-up call

by 28 Aug 2015
A new survey provides overwhelming evidence that Canadians are extremely concerned about the long-term care challenges seniors face and yet the insurance industry is doing little to ensure our aging population does so gracefully.
"It is certainly fitting that we're meeting in Charlottetown where our forefathers sowed the seeds of confederation," said Bob Nutbrown, a member of the PEI Nursing Home Association. "Caring for our seniors is one of the most important things we can do as a society, and according to this survey, Canadians want government to do more."
The Canadian Alliance for Long Term Care surveyed 1,000 Canadians in July about this subject. Ninety-three percent believe that the federal government should work with the provinces to ensure that Canadians have access to the same level and quality of long term care regardless of where they live in Canada.
That’s an admirable thought but it’s hardly realistic given our health care system is already stretched to the limits. Somebody’s got to pay for long-term care but it’s not likely that the government, federal or provincial, is going to come to the rescue of hard-working Canadians.
Thus, advisors and insurance carriers have an opportunity to play the knight in shining armour.
“It’s been positioned as an elitist product [LTC insurance] where people mistakenly believe the premiums are going to be $4,000 or more a month and that’s not affordable. Advisors hear this stuff and don’t want to go there,” LTC expert Karen Henderson told LHP. “The fact of the matter is the product has become much more flexible, much more affordable, much more adaptable.”
Henderson believes that advisors who educate themselves about how the product works and understand inside and out the differences between the policies offered by the handful of companies that sell LTC insurance will do right by their clients.
Unfortunately, carriers don’t make it easy for advisors providing almost no marketing or product support for LTC insurance.
“Long-term care insurance is not being marketed today,” said Henderson. “Since Sun Life dropped their specialist program a couple of years ago for the third time, nobody is selling LTC insurance.”


  • by Lynda 2015-08-28 10:57:56 AM

    I am retired but, when working, I could not find LTD insurance with any guarantee on pricing after the first five years. This made me very reluctant to buy it for myself. And I would not sell what I did not buy personally. Instead, I concentrated on building portfolios (including life and disability and critical illness insurance) that would hopefully bridge this need.

  • by David Juvet 2015-08-28 12:56:52 PM

    While it is an industry-wide standard for the long term care insurer to reserve the right to adjust rates after the first five years, the usual pattern is to simply introduce a new product. If an insurer repriced the already-issued policies it runs the risk that the healthy insureds within that block will simply apply elsewhere and,after issue,simply cancel their existing policies. Secondly,insureds can always reduce their covarage if the new,higher premium is unacceptable. Thirdly,insureds can compare the cost of paying the increased premium with having no insurance: the same analysis they made when they bought the policy, and no doubt concluding at that time that it made sense to pay for at least some of the cost of care via insurance.
    At some point there will have to be some degree of premium deductibility for this type of insurance. In the USA it is 100% dedcutible against income and is a $1 Billion/year industry.