the proportion of seniors has been steadily increasing for the past 50 years due to below replacement fertility and the lengthening of life expectancy this increase will accelerate in the coming years as more baby boomers reach age 65 years of age with so many like ly to need long-term care assistance and relatively so few entering the workforce to earn and pay taxes to support them where will future funding for long-term care come from Individual long-term care insurance coverage could be part of the solution to this problem let's take a look at long-term term care plans that are available today in the Canadian Marketplace first of all a explanation an explanation of what is long-term care what are long-term care facilities well a long-term care facility is simply a building or uh group of buildings set aside a facility designed for those who can no longer look after their daily physical needs independently this is an important word independently what we're saying here is that these individuals are no longer able to take care of themselves without some type of assistance now the common uh perspective today is that these long-term care facilities are primarily for uh older people however this is not always the case uh today uh we have situations where we do have young people as a result of uh uh diseases that are targeting uh younger individuals muscular distrophy uh multiple sclerosis are examples we have people that uh may have incurred a brain or spinal injury and they are going to need long-term ongoing care uh because maybe they may have some mental or physical uh restrictions as a result of these injuries and of course we have uh as mentioned before diseases of age uh dementia and Alzheimer's disease so uh long-term care facilities have uh been established to accommodate the needs of these individuals uh who require special assistance during their lifetime uh you will also notice that the financial burden the cost of this if you uh look at the cost of having someone enter into a long-term care facility uh the monthly costs can be significant now we'll take a look at what those costs might be uh in this session but let's get into some more of the details about long-term care insurance which certainly can be used to offset the ongoing costs of long-term care now the range of services available under a long-term care facil uh policy uh is not simply for a nursing home coverage in fact there are four levels or four types uh or ranges of care that are available under long-term care insurance policies uh first of all there is home care so for example if someone uh wants to in fact needs assistance but would prefer to stay in their own home and and this is usually the case with many uh seniors uh their preference would be if they needed assistance they'd like to in fact stay at home in their own home and have that assistance come to them in their home and so you know in most cases if people need assistance someone is going to be the caregiver and you know in the early days of that need tends to you know maybe be a family member could be a spouse or might be a uh an older child that will be able to provide them that assistance in their home or they may be able have to hire a health care worker to come into the home to provide them with assistance and that assistance can be some nursing care or simply companionship uh during the day uh provide some assistance in looking after the needs of the house uh in some scenarios uh they may need someone to stay overnight uh from time to time to provide them with the assistance that they require so long-term care policies uh can provide dollars available to offset the cost of home care respit care is another area where coverage is provided and what do we mean by respit care well respit care simply means means that uh you can place the person that is suffering from this uh illness or or requires support you can actually place them on a temporary basis in a formal uh long-term care facility or a nursing home for a temporary period And this is really designed to give the caregiver uh some relief uh over a short period of time as you know being being a caregiver can be a very strenuous uh responsibility and these caregivers uh they need some assistance from time to time they may want to take uh a few weeks for a bit of a break maybe they want to take uh a vacation to recharge their energies and so in this scenario uh you can actually put the uh person that you're giving the care to you can put them into a nursing home for week or two a temporary basis and that will be covered the cost of that will be covered by the long-term care policy uh another area where uh long-term care policies will apply is for assisted living and so these are more commonly referred to as senior residences so the senior moves into that residents that basically can take care of themselves but there are on-site support support services available if they require it if they no longer want to uh uh cook and sometimes those facilities don't allow uh cooking or uh kitchen facilities in the each of the uh residents units so maybe in fact they'll their their meals are provided in a centralized uh restaurant or dining facility uh so that would be there but any other services they might require laundry services or uh you know hairdressing whatever else these are available in these Assisted Living types of uh situations uh many of these seniors that move there you know they still drive they have a place to park their car so they're they're still uh you know quite mobile and able to look after themselves but some of the services they may want to take advantage of and in these Assisted Living uh residences these services are provided at at you know a cost uh the fourth type of service tends to be a full nursing home type of facility care so uh people may get to the situation where they're unable to look after themselves and they need 24hour supervision or nursing care and so these are people that require chronic ongoing care so a lot of the Nur nursing home facilities uh under long-term care will provide these range of services and if you have a long-term care policy uh it'll Define what they're going to be paid paying for what services what range of services are covered but they tend to be uh you know home care first of all moving into sort of an assisted living type of structure and then eventually uh that individual may require full nursing home 24-hour supervision and nursing care so this these range of services are available in these long-term care facilities and they are also uh coverages for the cost of this are available under long-term care policies and so where uh who provides long-term care today uh uh well we have four uh sources or providers of uh long-term care uh provincial governments will provide a facility that uh you know they're publicly funded or they may be uh publicly subsidized part of the cost of it is subsidized you can also get long-term care facilities offered by not for-profit organizations some religious organizations have built these uh facilities to accommodate the members of their uh congregations and then we have organizations that operate these on a for-profit basis so this is a business operation operating on a for-profit basis so these are the four basic sources of long-term care facilities available currently now what is it cost to be in some of these facilities well it can be quite expensive and the cost uh is going to vary by the province in Canada in which you live in and so currently uh these costs can vary anywhere from $900 a month up to5 to $6,000 per month to be in a long-term care facility and the difference in the price uh many times is related certainly to the level and the quality and the types of services that are available but a lot of times the cost uh varies by the level of government subsidy provided in each province and so the quality the services uh and the level of subsidy are going to vary by province but in general uh this is not an insignificant cost for someone moving into these facilities table 3.1 in your textbook uh will provide you with a sample and an example of the costs of these types of facilities uh in Ontario uh basically we're looking at anywhere from $4 to $5,000 per month then this is after tax dollars for the cost of this facility and so long-term care insurance policies have been designed to provide some assistance and to offset some of these costs of long-term care and so you know uh yes people might have uh pensions that they can rely on whether they were private pensions or government pension uh but in many situations the cost of of this long-term care uh facility uh in many situations will extend uh Beyond what's provided by their pensions and so the long-term care uh policy will provide that subsidy to the pension and so that'll help reduce the financial strain on individuals and their families so long-term care policy policies are available as Standalone policies so you can buy an individual Standalone policy or you can buy a rider to a life insurance or critical illness policy uh so you buy a long-term care rider that's going to add the coverages to those existing plans uh issue ages are usually age 65 and under and in general primarily the prospects for this type of a policy are people people uh prob probably 45 to 55 years old and in fact we find a lot of uh uh people today in uh this age range or maybe in their 50 to 60 are buying these types of policies on the lives of their parents because they know at the end of the day they're likely going to be responsible to assist with the cost of long-term care for their parents so many people are buying these type of policies on the lives of their parents now these types of policies provide a daily maximum benefit to those unable to function independently so you are purchasing X number of dollars of subsidy per day times the number of uh days of coverage and I'll talk about that in more detail in a moment now the benefits uh can be paid directly to the the facility that the individual is residing in this is called the indemnity model uh so they're going to indemnify you for X number of dollars per day uh paid directly to the facility or there is the expense reimbursement model where the expenses are going to be reimbursed the patient in fact submits the an invoice they pay in fact the expenses first of all UPF front and then they submit the invoice to the insurance company to be reimbursed so the indemnity uh model and the reimbursement model are those two models that are available now what kinds of coverage are available under a long-term policy well uh coverage are is for expenses that are not covered by the provincial healthare plan so certain things are going to be covered by the provincial health care but uh most of the long-term care policies will provide coverage uh that exceed what's available under provincial health care plans there tends to be a waiting period you're familiar with that term I'm sure by now of 0 to 90 days uh these plans are medically underwritten so the person that's going to be covered uh they're going to have to provide medical evidence during the underwriting process and as I mentioned before uh you're actually purchasing a number of dollars of coverage and so uh it's a maximum daily rate times the number of days of care you want so let's say for example you want to have coverage or a subsidy of $200 per day and you want to have that subsidy for 365 days so we'll just take the $200 times the $365 and that comes out to $73,000 so you're going to have $73,000 of coverage that you are going to be purchasing under this long-term care plan there are overall maximums and these are usually specified in the contract and standard exclusions apply you know War terrorist activity all those standard ones that you are familiar with with other types of insurance plans benefits here uh once these benefits are payable they are going to be received taxfree again because premiums have been paid for with after tax dollars so let's talk about the uh types of policies and the cost uh you know most policies that are issued are of the guaranteed renewable type and so that means that each year uh the policy renews but in fact your premiums may be able may be changed but there only going to be changed uh to an entire class of risks so individual ones won't change because of an individual situation but those premiums can change based on the entire class of risks that are involved so these are not uh non-cancellable uh types of plans or or uh fully guaranteed in fact they are guaranteed Renewables so they will renew but the premiums could change uh based on an entire class of risks uh there's usually a 30-day grace period that will apply and that's similar to uh life insurance policy so if you don't pay your premiums you have 30 days of grace to pay the premium and what is it that's going to impact the cost well obviously it's going to be how much benefit what is the daily benefit you're buying are you buying $100 a day2 $100 a day $300 a day what is the benefit amount you're buying for how many days are you buying this what leev you know what duration of coverage do you want and what are the things that are going to be in your coverage so the various Clauses the various types of coverages that are involved uh what waiting period are you're going to have zero days or 90 days waiting period um and so your premium is going to be obviously based on these factors uh and on the underwriting uh requirements are there any exclusions involved are there any you know what are the qualification requirements in terms of the benefits they're going to be paid so at the end of the day premium is going to be based on full underwriting that's required for these types of long-term care plans so let's look now at CL s uh am I going to be able to Simply decide to move into a long-term care facility and now submit a claim well unfortunately it's not going to be that simple uh in order to uh receive a claim and be eligible for a claim under a long-term care policy uh you must be unable to perform two or more of the the activities of daily living you'll see them referred to as ADL uh independently in other words just because you move into a long-term care facility doesn't mean you automatically qualify for benefits under a long-term care policy in order to qualify for benefits you must be unable to perform two or more of the activities of daily living now what are these I have these down here the activities of daily living or the ADLs are dressing bathing toileting transferring which we really mean moving around on your own eating on your own or maintaining continents in other words uh you are unable to maintain your bladder or or you're retaining continents in terms of uh having to go the bathroom uh without uh you know you may have unable to control your bowels or your bladder and so if you are unable to perform two or more of these activities of daily living on your own in other words independently you cannot do this independently you need assistance for this then and only then will you qualify for a claim under the long-term uh care policy now there is a an umbrella test and so that if you are cognitively impaired you will in fact qualify for benefits under this policy so cognitively impaired uh usually refers to a certain level of Dementia or Alzheimer's uh uh disease or maybe as a result of an injury uh you just simply cognitively uh unable to take care of yourself so this is sort of the umbrella test so if you fall under this scenario you will qualify for a claim under your long-term care policy but if not under the cognitive impairment test uh you must be able you must be unable to independently perform any two or more of these activities of daily living so you need to remember these ADLs and you need to remember what they are uh dressing yourself bathing yourself going to the bathroom on your own moving around transferring on your own eating on your own or maintaining continents as I explained before so we can also add uh Riders to a long-term care policy and you're going to see these just these are similar to the ones we've discussed under uh critical illness policies and then some disability insurance policies cost of living uh Rider I won't spend a lot of time explaining this I think you're familiar with this this is a writer that provides for increasing uh benefits due to the uh impact of inflation and you also have the return of Premium Rider that that's available on long-term care facility types of policies also uh lots of uh concern or you should be familiar with the limitations under a long-term care policy obviously contract wording is crucial you know what is it that's actually covered uh definitions are critical to determining what benefits you qualify and so you'll find that you know long-term care plans critical illness insurance plans and disability insurance plans these are so-called living benefit types of plans uh you know I have to reiterate that contract wording and definitions are very critical when you are purchasing uh one of these any of these types of plans uh and so you know uh we have uh for exam an example here under long-term care plans where Munich re which is a a reinsurance company uh and you should know what a reinsurance company is if not you should look it up uh and make sure you understand what role a reinsurance company plays in the insurance industry but uh Munich re states that their records show that almost 40% of claims for long-term care benefits are declined during the claims process and that's primarily because the insured medical condition do not meet the definitions under the insurance policy so this is a pretty significant Point here and so you know the in other words we have situations where the medical opinions of the insured are going to be differing from the medical uh opinions of the insurer so we have to be conscious of this situation and if we are selling these types of policies uh living benefit policies in general very important that you understand if you are the one selling the policy you understand the terminology and the Clauses in involved and you are able to explain certainly to the client what's covered and what is not covered so those are the key points I want to make on long-term care uh the facility and the types of long-term care policies that are available in the marketplace