A Brief Overview of Canadian Long-term Care Insurance

There may come a time in our later years when we simply are unable to live on our own. If you read the statistics, 50% of Canadians are expected to need long-term care after 75. With increased longevity and the aging of the population, it is advisable that we sort out these matters as soon as possible. In this article, we are going to give you an overview of long-term care insurance, as well as briefly describe policies from three different Canadian insurance companies to help you compare.

What is long-term care insurance?
If you can’t do at least two of the following six activities:

• dressing,
• eating,
• toileting,
• bathing,
• maintaining continence,
• and transferring (e.g. from a bed to a chair)

on your own (the exact activity list depending on your individual policy), then you qualify for your benefit from long-term care insurance. Your policy will then pay you the agreed tax-free benefit on a weekly basis to help you get suitable assistance.

Long-term care coverage helps protect the resources and health of not only you, but also your children who would have to invest extra resources to provide for your needs. Unlike in Life Insurance, Long-term Care plans do not normally prefer non-smokers, nor do they distinguish between females and males.

Read here if you want to find out more about long-term care insurance vocabulary and definitions.

How to choose your long-term care insurance policy?
What to ask about your long-term care insurance policy:
You should first check for any exceptions in the policy as to when and how you get to your benefit. Then, try to estimate how much your care may cost you and for how long. You may choose to opt for a policy delay (elimination period) which will let you pay for your care from your own pocket for a chosen time before the policy kicks in, which makes the policy cheaper. Furthermore, see if the policy offers you guaranteed premiums (i.e. level amounts) and for how long. Examine any policy riders and add-ons of interest to you and don’t forget to consult your choices with an independent broker.

Interested in more details? See Shopping for a long-term care insurance policy.

Comparing insurers’ offers
You can buy Long-term Care insurance from Ontario Medical Association/Sun Life Insurance, Penncorp Insurance Company, Manulife Financial, RBC Insurance, Desjardins or Blue Cross. Let’s briefly look at a few of them in turn.

Ontario Medical Association (OMA) offers a long-term Care insurance policy to you and your family members 21 to 80 years of age. The policy is in fact underwritten by Sun Life Financial. The prices are the same as those of Sun Life’s plans. The policy has a rolling 5-year premium guarantee and offers a possibility of no elimination period if you need facility care. The plan is receipt-based. Premiums are lower for men.

Penncorp offers a so-called One Step Long-term Care, which pays the benefit already as soon as you have one incapacity, including cognitive impairment, which allows the insured to enjoy the broadest possible coverage. This is the plan’s specialty in Canada. One Step Long-term Care Plan by Penncorp is available to individuals aged 30 to 70. This plan doesn’t have a premium guarantee on the policy’s premiums.

Manulife Financial is trying to bank on simplicity. Manulife’s policy is called Living Care and the client is merely required to fill in an application form and undergo an interview. This is conducted by telephone if she or he is less than 70, and it should be conducted in person if he or she is 71 or older. If you are older, the insurer may get in touch with your doctor to verify your medical information. Manulife does not require laboratory exams during a long-term care application process. The policy is not receipt-based and it has a minimum elimination period of 90 days, which is longer than most competitors.

At Desjardins, the rates are a bit more expensive than competition’s. However, you have the money at your own disposal and don’t have to provide any receipts. Premiums are guaranteed for the first five years of the plan and favouring males.

You surely see that it isn’t easy to understand all of the insurance offerings in the market. Ask a broker you trust to help you out.

To find out more info about long-term care insurance, please check out our Long-term Care Consumer Report.

Searching for more details? Please see our enumeration of Interesting Facts About Long-term Care Insurance.

The European Capital Test

In the middle of 2010, Europe’s bankers underwent a stress test to determine the assortment of their capital holdings and to what degree they relied on resources connected to problematic states. In spite of the results of the stress test being positive in the beginning, it was found after a while that there were important omissions of details in the test templates. The E.U. banks’ capital structure makes them indeed subject to more risk than is considered healthy.

A few weeks ago, in July 2010, a stress test was imposed on all European banks to determine whether they were ready to survive a future financial downturn. This assessment was chiefly aimed at assessing the EU banks’ reserve levels and its type – whether a satisfactory level of reserves exists and whether it is of a satisfactory quality for the examined banks to rely on. Several countries outside the E.U. introduced a test on their banks’ reserve ratios as well – LSM Insurance informed its followers and clients about that earlier this year as well. The E.U. test discovered that a handful of banks (especially in Greece) were in an unfavourable position, but the the findings in general helped to solidify the investor confidence in the European banking system in general. For those reasons, the Euro and other EU currencies outside the monetary union were benefiting from an unshaken position in the international market.

That is to say for a tad more than four weeks. Early in September 2010, The Wall Street Journal released a detailed analysis of the test results and compared it to a review of the official financial reports of the examined banks. WSJ found that the test subjects often did not manage to detail all the necessary descriptions on their funding, seeing as the numbers could not be entirely matched their statutory reports. This way, the transparency of the input details was unfortunately affected. The banks did not lie. Rather, the banks just did not care to categorize their holdings correctly as the CEBS guidance was not written clearly enough either to start with.

Traditionally, government debentures are believed to be carrying no risk. Considering the financial distress in in Greece, however, they have gained on importance. Greece’s near-bankrupt status puts riskier government debentures and as such, the Greek government bonds ought to be recorded differently. Many banks just would not make this principle clear when reporting. Some banks wouldn’t report parts of their capital holdings, claiming that it was because of their volatility and the fact that they were actively traded in the normal course of their business. This way, they effectively improved their results in an uncontrollable fashion. Since every tested participant “understood” the requirements of the test with slight differences, each tested subject disclosed its reserve holdings differently and that caused that the results are drawing from different assumptions. Therefore, they are virtually incomparable.

In short, the paramount issue with the testing was the limited amount of extra information that the banks included for the regulators. Obviously, the CEBS test requirements were too relaxed to really oblige the banks to reveal any useful pieces of data. This is unfortunate for the Euro, which experienced a severe shock and has been trying to climb back up insecurely from that time forth. It is bewildering to see that even now, the CEBS is still confident with the original rules.

We certainly hope the CEBS and other banking regulators all over the globe are going to learn out of this slip and will take care that any other tests and regulations are well-thought through. Any more issues would harm the trustworthiness of the affected economy.