Last week we talked about Manulife Synergy, a combination insurance that incorporates life, disability and critical illness insurance. As part of a series reviewing insurance products from Canadian insurance companies, this week we will focus on Desjardins Life with Long-Term Care Advance. Don’t be put off by its long name, as it may be just the right product for you. As implied by its name, its a type of combination insurance that incorporates life and long-term care insurance. It’s the first of its kind in Canada to combine both life and LTC insurance. We’ll begin by summarizing some of its features.
Features of Life with LTC Advance
At the base of the policy is permanent life insurance, which pays out a death benefit to your beneficiaries when the insured passes away. There are three types of permanent life insurance available: 20-pay whole life, pay to age 65 whole life, and universal life. The whole life options are non-participating, meaning there are no dividends. Universal life can either be minimally funded to cover just the cost of mortality, or overfunded to use the tax-sheltered investment portion of the policy. The mortality charge of the universal life is based on a level cost of insurance, which means that premiums stay level until age 100.
When adding long-term care insurance to Life with LTC Advance, the policy provides a monthly benefit in case of loss of independence from age 65 or 10 years after the contract is issued, whichever is later. The LTC benefit is equal to 1% of the life insurance coverage amount for a maximum of 100 months. Also, the benefit that the insured collects from the LTC portion of the policy is deducted from the life insurance protection. For example, if the face amount is $100,000 and the insured makes a LTC claim for 20 months, he receives $1,000/month for a total of $20,000. The life insurance coverage is reduced by $20,000 to $80,000. When the insured later passes away, his beneficiaries will receive $80,000, assuming no further LTC claims were made. This is similar to the pool of funds available for all types of insurance seen in Manulife Synergy. Although it appears there won’t be life insurance remaining if you were on claim for 100 months, this isn’t the case. At least 25% of the initial life insurance benefit is guaranteed, which means Life with LTC Advance may pay as much as 125% of the original chosen face amount.
Life with LTC Advance is available from 30 days to age 55, although those between the ages 56-59 will receive individual consideration. The minimum monthly benefit for LTC is $250 and the maximum is $2,500. There is a waiting period of 3 months before benefits begin. Neither benefits from LTC or life insurance is taxable.
Desjardins also offers a program called Assistance Services at no extra cost. It provides telephone advice from nurses and lawyers, as well as coordinating services such as home care and research of facility care.
Premiums
| Age | Premium, Male | Premium, Female |
|---|---|---|
| 25 | $53.52 | $47.99 |
| 35 | $76.02 | $70.61 |
| 45 | $120.05 | $107.55 |
| 55 | $184.11 | $165.61 |
Premiums are slightly higher for males than females because males have a lower life expectancy. During a LTC claim, premiums are waived. They continue again once the insured is no longer on claim for LTC. Premiums are guaranteed and level for all of 20-pay whole life, pay to age 65 whole life and universal life. Premiums for universal life is paid to age 100, at which point it becomes paid-up and no further premiums are necessary to keep the policy in force. This is a feature of all permanent life insurance.
Is Life with LTC Advance suitable for you?
The reason long-term care insurance is gaining popularity in Canada and other parts of the developed world is because of increased longevity, which isn’t matched with improved health. Many seniors in Canada are living with chronic diseases and as a result, they can no longer live independently. Remember, the qualifying event is the inability to perform 2 of 6 activities of daily living without the help of another person, or cognitive impairment. As a result, many of these people living in sickness would qualify for long-term care insurance.
As the population ages and the sandwich generation are finding it tougher to take care of their aging parents and children, home care and facility care become prominent replacements. Since demand for these services are rising rapidly, their costs also increase at a quicker pace than inflation. It’s becoming increasingly difficult for pensions to fund these costs. Therefore, long-term care insurance is a way for some of the risk to be shifted to the insurance company, and have the funds available when it is needed.
Underwriting for long-term care insurance is much different than for life insurance. It’s true that life insurance companies still look at things like family and health history. On top of that, there is often a phone interview by a third party hired by the insurance company which involves a memory test. This helps them detect if there are early signs of cognitive impairment. The benefit of Life with LTC Advance is that underwriting does not require any invasive cognitive tests.
Desjardins Life with LTC Advance is a solution suitable for adults who have seen what their parents have gone through or are going through, and want to properly plan for themselves.
Source:
Desjardins Life with LTC Advance website
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the same result can be achieved with any regular T100 product if down the road when the person or their family need to pay for their LTC or Home Health Care by approaching http://www.life-funding.com and buying an impaired life annuity
Thanks for the comment Daniel. Perhaps that will be a topic for a future post!