Essential Planning – Page 2

The increasing need for Long-Term Care Insurance

The need for Long-Term Care Insurance is increasing as medical intervention and medications keep us living longer.

Every year, about 50,000 strokes occur in Canada. A stroke is the leading cause of a transfer from hospital to a long-term care facility.
Nearly 10% (1 in 11) of Canadians over age 65 are affected by Alzheimer’s disease or related dementia.
An increasing demographic (7%) of Canadians age 65 and over are residing in healthcare institutions.
An additional 28% of Canadians age 65 and over receive care for a long-term health problem, outside of a healthcare institution.

Sooner or later ageing baby boomers starting to enter retirement will increasingly depend on long-term care, offered by their children or professional health care services.

A study authored by Dr. Marcus Hollander and Neena Chappell of the University of Victoria found that approximately $25 billion dollars worth of unpaid care is provided willingly by family members and friends in lieu of paid care.

As the populace ages, more care for the elderly, such as respite care (additional home care services) will increasingly be needed to provide family members with the medical guidance and support they need to continue caring for their loved ones. With this in mind, are our families financially prepared to deal with costs associated with providing long-term care for loved ones?

Fewer hospitals offer long-term care A historic study which remains relevant, looked at a trend which revealed a 35.6% reduction in staffed long-term care beds in the extended care sector, from the late-80s to mid-90s, when our ageing population has been growing at an unprecedented rate. The baby boomer population is noticeably ageing. Canadians need to concern themselves with this question: Will governments be able to provide the necessary spaces and accommodate the increasing demand on the healthcare sector with regard to long-term care?

Source: Statistics Canada, pre-baby boomer info

What does Long-term Care Insurance (LTC) offer? Long-term care insurance provides money to pay for the care that you both desire and need. With LTC Insurance, you have:

Broader choices about the quality and amount of care you receive.
An increase of choices when determining where you receive care and by whom.

Sources: Canadian Institute for Health Information, Alzheimer Society website, Statistics Canada

Source: Some of the concepts and information are used with the permission of Patty Randall who is widely considered a leading advocate on the need for care-years planning in our country. Visit her website: “Aging Successfully with Passion and Purpose and Care-Years Planning” online at www.longtermcarecanada.com for discussions, ideas and to obtain family materials on this issue.

Financial goals should include Long Term Care

How do I integrate Long-term Care Insurance into my financial goals?

When considering Long-term Care coverage, it is best to begin by formulating a long-term care plan that addresses your wishes and considers your family situation as well. Perhaps begin by making a list of care items you will want to discuss with loved ones. Who will be your care manager? What responsibilities will they have? What responsibilities will you want other service providers to consider? To what extent are family members able or willing to provide care? Long-term care, if required, will involve the help of many, and by having meaningful discussions ahead of time, you and your family will be able to address concerns such as costs.

Prepare far in advance to determine how you will pay for such care in each possible scenario. Then call to inquire about care service companies, different residence types, volunteer groups, and care equipment companies.

As you consider purchasing Long-Term Care Insurance (LTCI), ensure that you have an understanding of what care services actually cost and what is covered in the contract. Then, with the help of an insurance broker, you can begin reviewing different types of LTCI plans and determine a plan best suited for your potential needs.

The real cost The very high cost for accommodation in a long-term care facility can range from $800 to over $5,000 per month depending on the room type and the level of government funding available in your province. Private home care service costs range from $12 to $22 an hour for home-making and personal care; to between $18 and $60 an hour for nursing care.

Source: Sun Life Financial

More than one-third of Canadians aged 45-64 who provided informal care to a family member or friend incurred extra expenses as a result of their care giving duties.

Source: Statistics Canada

Long-term care expenses could easily total thousands of dollars per year.
Provincial health insurance plans provide only limited coverage for long-term care.
Long-term care insurance can fill the financial gap, and reduce the burden on loved ones while maintaining better control over your future.

Some believe that provincial health care plans fully cover long-term care, or that their employee benefit plans include long-term care coverage. Government programs are not comprehensive and Canadians have to pay for much of their care. Few employee benefit packages cover long-term care. The costs for long-term care, whether in your home or in a facility, can be high. How would you pay for the care you need?

Use your savings or retirement income?
Use what you have set aside as an inheritance for your loved ones?
Use the equity in your home?
Depend on your family?

Consider purchasing a Long-term Care Insurance plan. Your insurance specialist can help.

Source: Some of the concepts and information are used with the permission of Patty Randall who is widely considered a leading advocate on the need for care-years planning in our country. Visit her website: “Aging Successfully with Passion and Purpose and Care-Years Planning” online at www.longtermcarecanada.com for discussions, ideas and to obtain family materials on this issue

The seriousness of Long-Term Care Planning

We face a rapidly aging population

Since the 1920s the ratio of seniors over the age of 85 has doubled to one out of every 10 people. This number is to increase, to five times the current demographic, into the 2050s. That means that half the population in 40 years will be over age 85.

Who will care for you in your old age? When our health is fine, it is hard to imagine that we may as many will, lose the ability to manage our basic daily activities such as bathing, toileting, walking, dressing, feeding, or moving from our bed to a chair. Many also lose mental faculties that we often take for granted such as memory, logical or conceptual thinking or referencing dialogue with others. Without assistance it is near-impossible to function without these capacities.

Long-Term Care Insurance (LTCI) is an insurance contract with an insurer that is designed to provide care for our own chronic illness, disability, or an accident, all which have a higher potential of occurring as we age.

Some families are incapable of caring for a senior LTCI protects our families from the financial strain of providing long-term care, just as importantly as life and disability insurance protect the income of younger families. The ultimate question is who will financially support long-term care for you? LTCI is not just for seniors but for those who become similarly incapacitated at any age.

It is important to independently plan for our own long-term care because our government healthcare budgets and initiatives are limited. Facilities are often understaffed with overworked or burned out employees. Strict regimes are often the norm where the government foots the bill in both government- and privately- run institutions (many private companies provide government-funded care). For example, bathing can be limited to twice a week, toileting to three times a day, elders may not allowed to take a nap, and most are all placed in bed at 8:00 pm to be awakened to prepare for breakfast at dawn. These are the governmental necessities where a limited budget provides extensive health care for the aging populace.

The majority of us understand the need to save for retirement that can provide an income sufficient to meet our lifestyle expenses. However most people entirely overlook the enormous expense of paying for a private long-term care facility (some cost up to a quarter of a million dollars for five years). Why are they so expensive? They offer 24/7 high-level nursing care in a highly secure environment. Note: Anyone can call a few private long-term care companies and inquire about the cost for their care.

The time is fast upon us when aging baby boomers starting to retire will increasingly depend on long-term care, either paid for by themselves, their children and/or professional health care services.

Source: Financium

What powers do you assign to an executor?

Consider what is involved before naming or agreeing to act as an executor.

• An executor carries out the instructions in your will. Co-executors can share the task.
• Jurisdictional laws define what the executor must do, whether they are a friend, relative, professional, or a trust company—however, the will can specify even more extensive powers.
• The executor may have to deal with some or all of the following at an emotional time: a funeral home, beneficiaries, past or ongoing taxes, insurance and investment companies, government and business pension departments, real estate agents, lawyers, accountants, appraisers, stock brokers, and business partners.
• They may also be empowered to convert the estate to cash or divide assets equally among beneficiaries. They can also make payments to the parent/guardian of a beneficiary in most cases.
• The executor (especially if inexperienced in legal or financial matters) should know how complex the estate is before agreeing to the task. If necessary, appoint a co-executor who is a legal and accounting professional.
• Have a clear and objective idea of what will be involved before asking someone to be your executor and agreeing to act as one.

Discuss the parameters of an executor with your lawyer, before enabling one, or taking on the responsibility if given or offered to you.

When is the best time to sell or buy a new home?

People begin putting their homes on the market early in the year, though peak home purchasing occurs around June once school has ended, the weather warms up, and vacations begin. In mid summer people begin to have more time to house hunt. Income tax refunds can also increase payments, adding to the increase of volume.

While buying is steady in the summer, it begins to taper off in early fall, with another spike in mid-Autumn when overly optimistic home sellers in Spring, begin to lower their prices.

Like investing in the stock market it pays to be a patient house hunter. Though there are more Springtime homes to choose from, sellers hold their prices to the ceiling because of demand. During the late fall and early winter between Thanksgiving and New Years Day sellers can be more motivated to except a lower offer (people want to limit the time to sell during these holiday seasons when they are busy with families).

Large layoffs or announcements of a planned corporate headquarters moving out of a neighbourhood can result in more homes on the market for the short term with lower pricing by motivated sellers. Conversely, a corporation coming into an area can result in increased home prices.

Homes can sell for 3-5 percent more than the annual average in May through June; closer to the average annual price in very early Spring and Autumn; dropping to 3-5 percent below the average annual price prior to winter in December and January.

Sellers generally have a larger buying market during May through August during which time nearly half of the annual sales close. Bear in mind, that while deed transfers peak between May and August, most of those sales began one to three months earlier (it takes time to close home transactions).

Don’t be too stubborn. A home priced unreasonably high (up to 15% above market value) may be difficult to sell at any time, especially in a buyer’s market (in most cases is in early Spring). A “buyer’s market” in a city means more inventory is available, whereas a “seller’s market” means fewer homes are for sale.

Where possible, place your home for sale far in advance of buying the new one. This removes the possible need to juggle two mortgage payments in addition to the other complications of home selling. You will have more time; as well as more choices if you start during your new region’s peak inventory season.

Movers book up solid in the summer so plan this well in advance once you know your closing date. Shop around and call for an estimate. Book tentative dates until you know for sure adjusting your strategies as you go along.

The Internet offers virtual tours, and neighbourhood data, to help the decision-making process. With the advent of commission free websites, some sellers are listing their homes on sites such as comFree.com without the traditional real estate agent or fees. However it is important to get listed on MLS, and few people know the intricacies of bringing an offer to the status of a concluded deal.

How can I assess the expense of leasing or buying a car?

The rising cost of driving.

The rising cost of fuel is making many consumers change their thinking with regard to driving expenditures. On May 5, 2011,the following was reported:

“General Motors Co. (GM-N) reported its highest quarterly profit in more than a decade, helped by fuel-efficient cars and smaller SUVs that were in demand as gas prices marched higher. The biggest U.S. automaker said Thursday that it earned $3.2-billion, or $1.77 per share, in the first quarter. It was a great start in a challenging climate that would have sunk the company just a few years ago when it was too reliant on gas-guzzling pickups and SUVs for profit.”

On average you will need to work 30 weeks to pay for your vehicle (not counting fuel or repairs). Because driving a car is one of the largest expenses in an individual’s budget, plan this expenditure carefully. From the graph you can see that expense accumulate given a payment of an average vehicle payment of $500 per month plus gas.

Kilometres are presented as the average busy driving use per vehicle as promoted by vehicle manufacturers of 24,000 km per annum. Both monies spent on a car payment and for fuel are added in the final column. Adviceon does not claim accuracy for the numbers represented as extrapolations in the table, and uses them only for illustration. Errors and Omissions are excluded.

How does aging affect Critical Illness and Long Term Care?

The majority of the population of North America is approximately 50 years or older. This demographic truth increases the need for two specialized types of insurance: Critical Illness and Long Term Care.

Critical Illness Insurance Critical Illness Insurance protects your dependent(s) in the event that you suffer a disability due to a major illness such as heart attack, coronary bypass surgery, stroke,terminal cancer, blindness, paralysis, or kidney failure. It pays out a tax-free lump-sum benefit. You could clear outstanding debts such as the mortgage, finance home renovations to meet changed living access needs, or pay for specialized medical treatments not covered under your health insurance such as certain chiropractor or masseur fees. There are no restrictions on how you use the lump sum benefit. It is not based on your ability to work, even if you fully recover. Collecting the benefit will require a doctor’s statement regarding your health, and confirming that you have survived the critical illness, generally for at least 30 days.

Long Term Care Insurance Long Term Care Insurance will pay for the cost of long-term care associated with a disability or chronic illness. It covers relocation to a long-term care facility or in-home caregiver assistance. Usually, the available benefit consists of a fixed tax-free amount up to several hundred dollars per day to pay for long-term or other healthcare. As the policy’s issue age for this coverage increases, the premiums for this insurance also increase. Look for policies renewable for life that will include coverage for skilled care, intermediate care, rehabilitation centres and nursing homes. Ask if conditions such as Alzheimer’s are covered and if extended care at home is an option.

Plan to anticipate changing circumstances

Financial planning must anticipate change. Your plan will reflect your specific financial goals and objectives, with a consideration of your level of investment risk tolerance.

Your plan can be flexible enough to anticipate life’s many changes. Financial circumstances and responsibilities often change over time such as a career or income change; the birth and education of your children or grandchildren; major purchases such as a home; retirement; and other life events, such as a disability or need for long-term care.