On June 24, 2021, Sun LTCI is closing to new sales as well as conversions from Sun Critical Illness Insurance.  Those of us in the insurance industry understand why companies close products or reprice.  Likely it is because the product is no longer profitable for the life insurance company.  Why?  Perhaps they are just having too many clientsā€™ going on claim.  That is a very compelling reason to consider these products before they are gone.  At the very least, you should complete the paperwork to undergo the underwriting process.  You can make the final decision to purchase if/when you get an offer of insurance from Sun Life. 

Photo by Sharon McCutcheon on Unsplash

Here are 4 scenarios that explain the importance of Long Term Care insurance

Scenario 1: 

Meet Frank and Brenda.  They are 51 and 49 respectively.  As per 51% of Canadians, they are divorced and share the care of their teenage children.   Since their divorce, their assets have been split down the middle and are now single income earners in their respective households.  They now need more than ever to rebuild their retirement savings, emergency funds and continue to pay their daily expenses.  Brenda and Frank cannot afford to get sick or injured as they will need to access their liquid assets which have already been reduced drastically. 

Long Term Care insurance offers an indefinite stream of tax-free income at a time one feels the most vulnerable.  This plan is not linked to income or employment.  It is triggered when one cannot complete 2 activities of daily livingā€¦. Things we take for granted every day we wake up.  They are:  1)  transferring, 2)  bathing  3)  dressing, 4)  feeding  5)  toileting and 6) maintaining continence.  Long Term Care insurance can also be triggered when a life insured is diagnosed as having a cognitive impairment.

As such, instead of tapping into their retirement savings, emergency funds or even their childrenā€™s education funds, Long Term Care insurance provides a stream of tax-free income earmarked for health impediments.  Note:  Disability income pays a monthly benefit only to a maximum age of 65.

Scenario 2

Meet Dan and Stephanie.  They are 45 and 40 and have 3 young children.  Stephanieā€™s mother (Annie) is on the verge of retirement (age 64).  Annieā€™s finances are barely enough to afford a comfortable retirement.  A prolonged injury or illness would deplete her assets rapidly.  As Dan and Stephanie love Annie, they know that they will need to step in butā€¦. With what money?  They are at a time in their life, where every expense is accounted for. 

Dan and Stephanie purchase long-term care insurance on Annieā€™s life to ensure that in the event of an illness or an injury, Annie would have the funds to be taken care of with respect and dignity.  The cost of Long Term Care insurance is a fraction of the ā€œcost of careā€.

 NOTE:  By adding a return-of-premium rider on the plan, in the event, Annie does not claim and passes away, all premiums paid into the plan would be refunded to Dan and Stephanie.

Scenario 3 

Meet Tom and Grace.  They have 2 children Mark and Sandie.  They are 21 and 18 respectively.  Mark is an avid snowboarder and Sandie has had a few car accidents since she received her license.   As Tom and Grace are fearful that their children will get injured, they purchase Long Term Care insurance on their lives. Having proper protection on their childrenā€™s lives provides financial peace of mind.  Long Term Care insurance can be issued starting at age 18 years or older. 

Scenario 4 

Meet Mike.  He is single and retired.  His one fear is to impose on his children should his health deteriorate.  His other fear is to outlive his assets.  Long Term Care insurance is the perfect tool which will ensure that:

  1. He will have the proper finances to be taken care with the utmost respect;
  2. He will not burden his children; and
  3. His assets will not be depleted drastically.

 According to statistics Canada, based on a report completed in 2018, approximately one in four Canadians aged 15 and older (or 7.8 million people) provided care to a family member or friend with a long-term health condition, a physical or mental disability, or problems related to aging.  As the population ages, this number will increase drastically.

This is the last opportunity that you will have to purchase LTCI with Sun Life.  There is only one last insurer in the industry offering LTCI and that is Blue Cross but you can speculate that they too will be having thoughts about closing their products.   

This isnā€™t like your local grocery store putting ice cream on sale.  Imagine that this is the very last time that they will ever be selling or making ice cream again!  I would be filling my freezer, my neighbour’s freezer, my neighbour’s neighbour’s freezer and so on. 

Contact your Investment Advisor right away to talk about how you can get this type of insurance coverage.

Authors:

Bram Lucht, Financial Planner

Sophie Moryoussef, Insurance Specialist, Nova Star Insurance Consultant Inc.

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