Future looks brighter for Long term care insurance

By Matt Bell | December 14 2016 07:00AM

Photo: Freepik

Some experts are predicting that long term care insurance is set to enter a period of increased demand from advisors and clients.

Dean Chambers, vice president of individual insurance at Sun Life Financial, says while sales have been stable over the past few years, recently the company has seen an increase in interest from clients and advisors regarding LTC insurance.

“Just as Baby Boomers moved through their careers and created demand and growth for critical illness insurance, they are now aging and realizing the need for long term care insurance as they do their retirement planning,” he says.

Karen Henderson, founder and CEO of the Long Term Care Planning Network, agrees we’re about to see a snowball effect for long term care insurance which will lead to growth, similar to what critical illness experienced.

Do Canadians understand it?

Research conducted by Sun Life in 2014 found 75 percent of Canadians understand they will partially be responsible for their own care, however there is a misunderstanding as to what areas government would cover with respect to long term care. “Among consumers, there seems to be an understanding that the system will be challenged to deliver the quality of care they expect,” says Chambers.

Henderson says in her experience, Canadians feel the government will cover them and they don’t need LTC insurance. She explains many simply don’t understand that it won’t be enough to cover them. Although it is not a pleasant subject, Henderson says older Canadians need to have a conversation with their families and their financial advisors about aging and dying; and how to plan for this financially.

“Unfortunately, too many Canadians make some dangerous life and financial assumptions like: we will all remain healthy; the government will provide for us; our money will last as long as we live; our families will be our caregivers and our spouses will be okay if we die,” says Henderson.

Never a better time

With Canada’s aging population, Henderson says there has never been a better time to offer LTC insurance to clients. She says advisors need help with understanding how long term care insurance really works, the peace of mind that it can provide and how it can fit into a financial or retirement plan.

She says the market is huge and women should be at the top of the list as they live longer and suffer more chronic illnesses than men. Other promising markets are small business owners and those with a family history of dementia.

“Long term care can be a very effective estate preservation tool for the right client. The sweet spot for recommending it is when a client is in their early 50s,” Henderson says. It’s in this (age range) that most people are healthy enough to qualify, have elder care experience and understand the importance of money for long term care.

Chambers says if there was increased public focus on long term care policy, then consumers might be more likely to better educate themselves. “We are seeing that more and more advisors have become aware of the need and are seeking ways to discuss and help their clients plan for the future costs of personal care and support,” he says.

Persistence will pay

Henderson recommends that advisors selling long term insurance should keep at it since the need for the product will increase over time. “The opportunity is waiting to be grabbed. The smart advisor who is looking ahead will see that clients are going to get older and they’re going to need care.”

Advisors should have a conversation with clients to ensure they’re aware of the financial cost of long term care and the impact this can have on families and caregivers, says Chambers. He adds that advisors should access resources to understand the ins and outs of LTC to assist in the planning phase.

“It’s only possible to spend your retirement savings or income once. Just like with a Will or a POA, laying out your expectations for future personal care and support is important,” says Chambers.

If an advisor is not comfortable selling LTC insurance, Henderson suggests they seek help from a specialist who can help. “You owe it to yourself and to your client to at least offer the option.”