The next big thing in living benefits is…?

by Will Ashworth27 Jul 2015
The number of Alzheimer’s patients is expected to explode in the coming years as boomers get older and begin to lose their ability to think and act for themselves. This reality, suggests Montreal-area living benefits specialist Tim Landry, is a big reason why long-term care insurance is going to gain more traction in an industry that so far hasn’t been so keen to get on board.

“I primarily sell disability, critical illness, and long-term care,” Landry told WP. “If I had to quit two and only keep one I’d keep long-term care.”

To explain his rationale for choosing long-term care over the others, Landry discussed the situation in the U.S. and Canada.

In the U.S. the LTC business faced three specific problems that hurt the insurance carrier’s ability to generate profits.

“When the products [LTC] were established and the pricing was set up, interest rates were higher than they are today. Nobody believed we’d see 1% interest rates. So, the insurance company’s not making enough money on their investments.”

The second problem is they assumed the lapse rate would be much higher than the 1 per cent that actually do. Because the 3-5% projection didn’t pan out, they were paying out more than they had coming in.

The third problem was that they allowed an additional trigger which doesn’t exist in Canada. If your doctor said you needed LTC, it made it far easier to claim and the insurance companies were flooded with claims.

Here in Canada we have a far more difficult problem that’s tied to our belief in socialized medicine.

 “What’s hurt Canada is the absolute belief because of Medicare that everything is covered. The government will cover me. Everybody believes that and the government has made it abundantly clear ‘we aren’t covering long-term care,’ we don’t cover care that maintains. People don’t understand it. They don’t understand the costs.”

That’s opportunity knocking.


  • by Peter 2015-07-27 1:17:44 PM

    LTC will have a difficult time catching on in Canada for a number of reasons ......
    1. There are very few employees working in insurance companies who have the technical expertise and marketing capabilities to properly train insurance advisors and these same companies are very reluctant to contract this training to outside experts.
    2. The mentality in Canada is that the gov't will look after people needing LTC
    3. By the time a person realizes at a later age that they need to buy LTC coverge the premiums are very expensive
    4. Premiums cannot be used as a tax deduction as in the US
    5. Premiums are guaranteed for only the 1st 5 years of the policy. Chance are 15 to 25 years down the line, when an individual may really need the policy, the premiums will be unaffordable to keep the policy inforce for people on a fixed retirement income.
    6. Middle class Canadians simply cannot afford LTC after they already purchased home insurance, car insurance, life insurance, disability insurance, critical illness insurance, business overhead insurance, partnership buy-out insurance, etc. Not ot mention pay the mortgage, buy groceries, clothing, kid's activities and university tuition. Where is the money to buy LTC?
    7. Underwriting is extremely picky even for people in the mid 40's to late 50's
    Not sure where the growing demand is from the consumers. The banks and insurance companies are the ones trying to unsuccessfully create the demand.