For months my siblings and I have been researching, touring and vetting Assisted Living Retirement Communities for our mother. As a planner, I have always known the importance of having enough money to cover this type of care for when the time comes. Realistically, everyone should be including a $3000-$8000 per month living expense in their long-term retirement planning.
Long-term care insurance is part of what we in the insurance industry call Living Benefits. Living Benefits also include products like Disability insurance and Critical Illness. Depending on your needs, desires and health condition, there are many types of policies available; here is a brief outline of each;
Long-term Care Insurance
As the population ages, more and more people require expensive long-term care. Canadians want the peace of mind of knowing that they will be able to afford the care they need without burdening their families with the costs. Long-term care insurance provides a benefit that helps cover the cost of nursing home fees or attendant care fees. Most plans generally pay a stated daily or weekly benefit once it is determined that the insured is no longer able to adequately care for themselves.
Critical Illness Insurance
Critical illness insurance is a relatively new product, which was introduced in the 1980s. It pays a benefit to the insured in the event the individual is diagnosed with any of a specified list of critical illnesses, such as cancer or a heart attack, and survives a waiting period that is usually 30 days. Some critical illness insurance plans may cover as few as three or four illnesses while others cover two dozen or more. Whereas disability insurance usually pays a monthly benefit equal to a percentage of your salary in the event you are unable to work, critical illness insurance pays a lump-sum benefit shortly after diagnosis, regardless of the ability to work. This can help pay for items related to the illness, such as medical expenses that are not covered by a health plan, eliminate your debt or pay for a much needed vacation.
Disability Insurance
During a disability, household bills still need to be paid. Disability insurance provides a benefit, usually 60-70% of salary, in the event the insured becomes disabled and is unable to work. There are various types of disability coverage, ranging from policies that will only pay benefits if you are unable to work at any job; to policies that will pay benefits provided you are unable to perform the duties required for you regular job.
Many employers offer their employees group disability insurance coverage. However, self-employed individual or individuals who are not covered through their employers should ensure that they have adequate insurance coverage to continue to pay their cost of living while they are unable to earn a pay cheque.
Insurance is an important part of everyone’s financial plan. Protection of one’s income and quality of life can be established from the payment of the first premium. As with all things in life, you get what you pay for; there are relatively inexpensive basic plans and more expensive comprehensive plans. It’s always important to consult a licensed insurance agent like myself to determine the most appropriate solution for your needs. If you have questions please don’t hesitate to give me a call.
Have a great weekend,
Tracey
Note: All insurance and segregated fund transactions are provided through Qualified Financial Services (QFS). Any information in the enclosed note is provided by Tracey Marshall who is a registered insurance agent under the Financial Services Commission of Ontario. QFS is not affiliated or related to Security Financial Services.
Source: Invesco MT 16-0915