Considerations for funding long-term care insurance

If you're concerned about the rising costs of long-term care and the potential financial impact on you and your family, you may want to consider long-term care insurance.

 A senior woman and her caretaker walk through a garden.

It's important to help protect you, and your loved ones from financial, physical and emotional burdens if you should require long-term care.

Long-term care is the assistance or supervision you may need when you are not able to do some of the basic activities of daily living such as bathing, dressing, or moving from a bed to a chair. You may need assistance if you suffer from an injury like a broken hip, an illness or a stroke. Others may need help because of mental deterioration called severe cognitive impairment that can be caused by Alzheimer’s disease, other mental illness or brain disorders.

Funding long-term care

FUNDING TYPEDESCRIPTIONPotential Benefits & Risks

SELF-FUNDING

Self-funding means paying for long-term care costs out of pocket with personal or family money, savings, pension benefits, stocks, bonds and other investments.

Benefits: Flexibility in choosing care providers.

Risks: Could jeopardize goals and may be costly.

FAMILY

Your family or loved ones provide care and may need to also contribute financially.

Benefits: Care provided by those you know and trust

Risks:  May not be skilled at providing care. Caregiver may have to decrease work or shift priorities. Other financial and non-financial strain on families. 

GOVERNMENT PROGRAMS

Provincial medical plans can help pay for some long-term care expenses in certain cases, but they generally do not pay for care at home.

Benefits: Some care costs may be covered by the government plans. 

Risks: Limited control and limited or possibly no coverage. Some subsidies are subject to income/means tests.

LONG-TERM CARE INSURANCE

This insurance is designed to provide coverage for extended long-term care needs, whether needed in your own home, or in a facility. Provincial medical plans, or private health policies may not pay for long-term care expenses.

Benefits: Transfer some or all of the risk to the insurance company. May prevent depletion of personal funds.

Risks: May never use coverage, although options may exist to recover costs in certain situations.

   

Long-term care insurance benefits

Knowing what the benefits of long-term care insurance might be can help you determine whether it’s right for you and your family. These benefits include:

  • Helping protect your retirement savings, and legacy plans.
  • Helping protect the family from providing all the care

Basic components of long-term care insurance

  • Benefit Amount: This is the maximum amount of benefits paid in any single day, week or. Benefit amounts vary by plan.
  • Waiting Period:  This is the number of days, once you've met the definition of needed long-term care, that you'll have to wait before you start to receive benefits. The shorter the elimination period, the higher the premium will be.
  • Benefit Period: This is the amount of time the coverage will pay benefits for.
  • Total Benefit Amount: The total benefit amount is determined by multiplying the monthly benefit amount by the benefit period (if unlimited). These are the funds that are available for covered care. For example, to determine the total potential benefit amount of a monthly benefit of $5,000 with a four-year benefit period, multiply $5,000 (benefit amount) x 48 months (the benefit period 4 x 12 months). The total amount of benefit dollars available is $240,000.
  • Inflation Protection: This is an optional feature available on some plans. Generally, it allows for the benefit amount to increase by set percentages on each policy anniversary in recognition of the pressure inflation puts on the costs of long-term care.

Talk with an Edward Jones financial advisor to evaluate appropriate strategies for yourself and your loved ones.

Important Information:

Insurance and annuities are offered by Edward Jones Insurance Agency (except in Quebec). In Quebec, insurance and annuities are offered by Edward Jones Insurance Agency (Quebec) Inc.