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| Long Term Care Insurance (LTCi) - The Financial product for the next 40 Years! |
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By Tim Landry, Quebec Canada I will begin and end this article with personal notes – the first to say that, when I started in the insurance business in 1969, people who were 65 were at the “beginning to get old” stage; people at 70 were OLD and those at 75 were either VERY OLD or dead. Back then – excluding school gyms, there were 3 gymnasiums – the MAAA, the YMCA and YMHA. Today? Forget the change in perspective caused by being 37 years older! Age 65 is not even beginning to be old. Age 70 MIGHT be where age 65 was in 1969 – and it is certainly reasonable to say that 75 is not even truly OLD any more. I had a 70-odd year old man walk into our office last year – WITH HIS MOTHER (who was age 100). I just “googled” “Excercise Facilties” in Montreal – and had 3.2 million hits. I do not believe for a minute that there are 3.2 million facilities in Montreal for exercise - BUT THERE ARE A LOT MORE THAN THREE! We ARE living longer – we ARE more concerned about our health – and we can count on living to ages our parents never dreamed of seeing. But can we count on all of those extra years being healthy ones? Every statistic I read screams NO! Let’s look at some: Annual healthcare spending per capita between ages 55-64 is $3,621 – age 65 and over? $10,834! When I was born in 1945, there were 23 taxpayers per retiree. By 2030, there will be TWO taxpayers per retiree! How will our tax system support THAT? At the 2nd World Critical Illness Conference – held in Victoria BC between Jan. 17 – 19, 2004 – one of the speakers indicated that he had testified before the Romanow Commission on Canada’s Healthcare system that, if Canada continues on its present path, Medicare will consume 100% of the Federal Budget (THAT’S ALL OF IT!) within 20-25 years. In Quebec, where I live, the annual shortfall in homecare spending is $300 million! Basic needs of seniors cost between $3500 and $4000 per month. Quebec’s spending on homecare in 1999: $37.36 per person PER YEAR! In the Montreal suburb where I worked about 5 years ago – the local CLSC had about 63 names on the waiting list for homecare. WAIT UNTIL THE BOOMERS HIT! Patty Randall – in her book “Let’s Talk – the Care Years” details the story of her parents’ journey through this period in their lives. The cost of the first 5 years of care? $200,000 after taxes! These are Canadian numbers – her family lived in British Columbia. What do OUR PARENTS value? The number one thing is independence. They do NOT want to be dependent on us. They do not want us sacrificing our careers and our children’s schooling to look after them. What do WE want? We will give up everything for our parents – “They raised us – how can we deny them?” We will sacrifice our careers – our retirement plans – our children’s education – to be sure that our parents have what they gave us. The number one cause of employee absenteeism in the US (and Canada ALWAYS follows) is “eldercare”. In 2006, the shift has already occurred. Women – who are the main caregivers – now will spend more time looking after their parents than they did looking after their children. Why do we not hear more about this? The government – whatever their political stripe – HATES the word “crisis”. That means they may have to do something unpopular – they may lose the next election! “Let’s not talk about this – let’s leave it for the future – so WE are safe!” 40% of our doctors – 40% of our nurses – will be retiring over the next 10-20 years! We talk about waiting lists now – WAIT until the peak of the boomers hit age 75 – which will be in about 30 years! No one will ever accuse the Reichman family of being “stupid”. Canary Wharf may not have gone as well as they hoped – but they are VERY sharp people. One of their major investments? Senior Citizen’s Housing! Why? All those schools which were bursting at the seams 30 years ago will have to become residences for seniors as those students age. How can you protect yourself? How can you be sure that the retirement savings you have accumulated over the years will be enough to support you through your retirement? How can you be sure that you will NOT be a burden to your family (Wait for my last personal item) during retirement? How can you guarantee that – should you need care (the odds are 1 in 3) that you will be a “customer” rather than a “patient”? Long Term Care Insurance is the umbrella that will do all this for you! Who should purchase it? All but the extremely wealthy (who have adequate means to look after themselves) and the poor – who have little choice except to rely on whatever the public system will be able to offer. If you are talking to those where “retirement” is not in the far distant future – if you are talking to those who make a reasonable living (they probably own their own home – live in a nice area – are the so-called “average” Canadians – this should be the number one item on their agenda. I am quoted on Patty Randall’s website www.longtermcarecanada.com where I say: “... I am already convinced that your book should be mandatory reading for every adult in Canada and CERTAINLY everyone in any position in our Health System and our Federal and Provincial Governments” - Tim Landry, MSA Financial I believe that even more than I did when I wrote it. Take (I believe) $25.00 – buy the book – and you will understand why I say what I am saying. How much does Long Term Care Insurance cost? If you take a client age 55 who purchases $100 daily benefit payable for life and including an inflation rider (VERY important – the cost of care has gone up by more than the inflation rate every year but one since the concept was introduced in the US), we are looking at an annual premium of $1,620. If your client has only $100,000 in investments, we are looking at a reduction in his return of 1.6%. If that figure is $200,000 – the reduction is 0.8% - and so on. Also – this return is not LOST. It will allow you to enjoy what you have worked long and hard for. One last note: We had a 91 year old woman living in the apartment above us. She was in fairly good health. Her daughter took her to Egypt and Switzerland (where they had family) every year. One year the daughter decided not to take her. The mother deteriorated almost overnight. She reached the point where she needed constant care – babysitting – preparing her meals – almost everything. She would often call her daughter – who lived only a short distance away and ask her to come over. She would then go out of her apartment and wait for her daughter – but she had no notion of time. After a minute – if her daughter had not arrived – she would go back and call her again. I remember on about 3 occasions her daughter screaming at the top of her lungs “MOTHER, I WISH YOU WOULD DIE!!” I know she did not mean that – but she was stressed to the max and beyond (she had a son with MS on top of this). Imagine the stress reduction if she had been able to hire someone to properly look after her mom. |
| Tim Landry is currently the director of living benefits at MSA Financial Services in Montreal. He can be reached at (514) 343-0200 ext. 228 or at tim@msafinancial.com . He has been in the insurance industry for 37 years. He has been a specialist in living benefits at insurance companies (Crown Life, Canada Life, Paul Revere) and MGAs. |
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