New survey shows only one in five factor long term care into their retirement plans
Waterloo - A survey for Manulife Financial reveals that seven out of 10 Canadians said they would prefer to have an annual physical exam than spend an hour discussing their long term care needs. This reluctance in discussing their future long term care needs helps explain why only 21 per cent of Canadians have factored long term care costs into their retirement planning.
Dr. Rubin Becker, MD, FRCP(c), a recognized Canadian gerontologist, explains that avoiding long term care planning is common – particularly as people must account for the possibility that they or their partner could experience deteriorating physical or mental health as they age.
“It’s rare to see people plan for their long term care needs. Many recognize they will require help, yet few can actually visualize it. And, many Canadians find care costs are much higher than ever imagined,” explains Dr. Becker.
While Canadians prefer to side-step the long term care discussion, they are not without worries about their future care. Fifty-seven per cent are concerned that they or their partner may need to go into a care facility in the future and are worried about their ability to pay for it. Moreover, 51 per cent fear becoming a burden to their family.
“The reality is that we’re living longer, having fewer children to depend on, and there is a strong likelihood of needing long term care someday, especially if we live to age 85. Planning for our long term care needs should help ease worries,” continues Dr. Becker. “Appropriate planning increases our ability to secure care, allowing us to remain at home for as long as possible in old age and it provides for a better quality of life, if and when facility-based care is needed.”
The lack of planning doesn’t come from a lack of personal experience with long term care. The survey found that 38 per cent of respondents reported having already provided long term care assistance to a family member or friend, mostly in the form of hands-on care. The greatest personal sacrifice in offering this assistance was “time loss.”
How Canadians fare in long term care planning
The Manulife Financial survey provided a number of insights about how prepared Canadians are and their knowledge about long term care planning.
Age 35 - 75
|Are likely to use savings or retirement income to pay for long term care (LTC), if needed||80%|
|Are likely to rely on government programs for LTC||61%|
|Are likely to use equity from the home to cover LTC costs||53%|
|Believe employee group benefits plans usually cover LTC||51%|
|Factored LTC costs into retirement planning||21%|
Paul Smith, Vice President of Marketing and Product Development for Manulife Financial’s Individual Insurance area, points out that many Canadians assume employee group benefits cover long term care costs, which is rarely the case. “It’s really important that Canadians know exactly what their benefit plans and current insurance policies will cover when it comes to long term care costs and plan accordingly for future care.”
Smith further explains that long term care costs can quickly deplete retirement assets, especially for couples. “The impact on retirement savings can be significant when you consider the costs of facility care for several years, with after-tax retirement savings. One elderly partner may require facility care, while the other remains at home, so selling the house to shore up long term care funds is not always the most viable option. If retirement savings become depleted due to facility care costs for one partner, the other partner can find themselves without money to support their own care needs.”
Manulife Financial introduces LivingCare
LivingCare is a long term care insurance product that provides a monthly benefit for individuals or couples to help support the costs associated with long term care. LivingCare provides the insured a monthly benefit rather than requiring receipts for cost reimbursement.
The person insured under the policy, or people acting under a power of attorney, can direct the funds as needed to help pay for care – whether delivered at home or within a care facility. A unique Shared Coverage option, the first of its kind in Canada, is available to couples (married or common-law). It allows them to share access to the coverage funds. For both the Individual and Shared Coverage options, the benefit is doubled when facility care is required to allow for the higher costs associated with this kind of care.
“In developing LivingCare, we leveraged the strength of Manulife Financial as a global company and consulted with colleagues in our U.S. operations, John Hancock, a company that has years of long term care insurance expertise and a leadership position in the U.S. market,” says Smith. “We also took a number of Canadians’ concerns into account in developing LivingCare. Shared Coverage provides a more affordable option for couples to plan for long term care needs. Each partner receives identical coverage under one policy and one, or both, partners can draw from the amount of insurance. It’s a Canadian first.”
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$410 billion (US$386 billion) as at June 30, 2007.
Manulife Financial is one of only two publicly traded life insurance companies with 'AAA'-rated insurance subsidiaries, the highest rating for financial strength at Standard & Poor's Rating Services.
Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '0945' on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.
1 Manulife Financial Survey 2007
Manulife Financial commissioned Market Probe Canada to conduct a research survey among a random national sample of 1,008 Canadians. All respondents were between ages 35 and 75 with annual household incomes of $50,000 or more. Interviews were conducted between May 4 and 27, 2007. Results’ margin of error: +/- 3.1 percentage points, 19 times out of 20.
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|Maureen Meehan/Jennifer Meneses
905-949-8255 (extensions 238/221)