While there are plenty of opportunities to talk with your clients about protecting savings and investments against the impact of a long-term health or personal care need, convincing them to commit to a solution requires a whole other story.

When we talk about long-term care, we mean the costs associated with becoming fully dependent on someone else for care. A real need exists for Canadians to consider this risk as part of their overall financial plan and for advisors to explain a solution—long-term care insurance (LTCI)—as a way to mitigate that risk. But we still have a lot of work to do to show Canadians how LTCI protects them.

Only four per cent of the potential market in Canada for LTCI has purchased the product,1 even though the following survey and experience show Canadians have reasons to be concerned about paying for health care during retirement:

  • The average 65-year-old couple has an 82 per cent chance that at least one of them will need long-term care in their retirement.2
  • Over 75 per cent of Canadians say it would affect their personal finances if they were to develop a chronic health condition.3
  • 74 per cent of Canadians admit they have no financial plan in place to pay for long-term care in their retirement.4

With this compelling evidence, why is LTCI absent from so many Canadian financial plans?

Is it that advisors don’t see the LTCI solution fitting in a financial plan?

Some financial analysts suggest LTCI is very expensive and that better financial tactics exist to combat health-care costs in retirement.5 According to advisors, another barrier to successfully selling LTCI is the ability for Canadians in their late 50s and 60s to qualify for traditional products, because of existing and/or unstable health conditions. Additionally, when people identify the risk quite late in their retirement planning, they struggle to be able to fit the solution into their budget.

It’s this feedback that led us to offer a new solution, Sun Retirement Health Assist

Sun Retirement Health Assist (Sun RHA) provides alternatives to the LTCI solutions offered in Canada since 1999. The unique design results in 30 to 60 per cent lower premiums, as compared to most traditional LTCI. Other benefits include a simplified application process and streamlined underwriting. We believe this approach will mean more of your clients will qualify for a form of LTCI protection.

Is it because advisors aren’t sure how to present the long-term care risk to clients?

Here’s an approach using the Your health, your retirement content available through Sun Life Financial’s Money for Life material: ask your clients if they’ve thought about the cost of health and personal care, especially in their later years. Show them how a chronic health condition or prolonged dementia in their retirement could affect their financial plan and their families’ ability to pay the bills.

Then explain the Five stages of care: the first four are independence, interdependence, supportive living and crisis management. Reveal the gradual changes that usually happen to clients’ personal and physical care as they age, leading up to the fifth, dependence—the most costly stage.6

A solution specifically designed for the final stage of care

We designed the new Sun RHA as an LTCI solution to help clients manage in the fifth stage, when continual skilled nursing care and extensive personal care are needed due to significant physical or cognitive impairment. No one likes to think about this final stage, but planning for it now means defining the level of choice and control you’ll want later, as well as understanding the accompanying costs you and your family may incur honouring your decisions.

Sun RHA can provide the financial resources your clients need to create choice and flexibility when the time comes for them and their families to manage their long-term care needs.

Finding the solution that fits

Everyone needs to plan for their health needs in retirement with personal savings and possibly insurance. LTCI protects retirement income and pensions from the impact of the cost of care. Perhaps your clients aren’t aware of the range of affordable options in the health insurance marketplace. A retirement income plan with no contingency for care may require the full coverage of a traditional LTCI design. If the plan needs only the added confidence of protection from a catastrophic need, when the need for care turns out to be higher or lasts longer than clients have anticipated, then Sun RHA may be the better solution.

We believe in the importance of filling any health insurance gaps in a retirement plan. By addressing sales barriers in our design of Sun RHA, we’re providing a more accessible solution for your clients who may be looking for a simpler, more affordable option.

You’ll be helping your clients preserve their savings and investments, right when health costs typically rise—significantly—in the final stage of care.

Learn more about Sun Retirement Health Assist (Sun RHA) and how to help your clients choose the right LTCI plan.

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1 Munich Re, 2011.

2 Munich Re, 2011.

3 2013 Sun Life Canadian Health Index™.

4 Guide to Long Term Care Insurance, Canadian Life and Health Insurance Association, 2012.

5 Example: Andrew Allentuck, “Will long term care insurance sink or save this family?”, Financial Post, July 6, 2012.

6 Dr. Mark Frankel and his team at Taking Care Inc. developed the Five stages of care.

Paul K. Fryer is Vice-President, Individual Business Management, with Sun Life Financial. Paul graduated from the University of Waterloo with an honours B Math in 1989 and obtained his actuarial designations (FSA, FCIA) in 1992. Since joining Mutual Life in 1989, Paul has had a broad set of experiences within Mutual Life, Clarica, and Sun Life Financial, including roles in Individual Insurance and Investments, Group Benefits, Group Retirement Services, Corporate Risk Management, Demutualization, and Strategic Acquisitions. His current responsibilities include product development, pricing, and product management for Sun Life Financial’s Canadian Individual Life Insurance, Health Insurance, and Annuity/GIC products. Paul has served on a variety of Canadian Life and Health Insurance Association and Canadian Institute of Actuaries Committees/Task Forces.