What Is Long-Term Care Insurance and Who Needs It?

As people live longer and healthcare advances, one question becomes more relevant than ever: how will you pay for care if you can no longer live independently? Long-term care insurance is designed to address that question, offering financial support if you need help with daily activities due to aging, illness, or cognitive decline.

This insurance provides a benefit — usually a monthly income — to help cover the cost of home care, assisted living, or nursing home expenses. It is not the same as disability insurance or government healthcare coverage, which may not fully address the long-term nature or personal preferences involved in care decisions.

How Long-Term Care Insurance Works

Long-term care insurance pays a regular benefit if you meet the eligibility criteria, typically defined as the inability to perform a set number of “activities of daily living” (ADLs) such as bathing, dressing, or feeding yourself. Some policies also trigger benefits if you are diagnosed with a cognitive impairment such as Alzheimer’s disease.

Coverage varies, but most policies include:

A waiting period, such as 30 to 90 days, before benefits begin
A monthly payout, usually between $1,000 and $5,000, based on your selected amount
A maximum benefit period, such as 2, 5, or 10 years, or even lifetime coverage

You can choose whether to receive the benefit as reimbursement (you submit care receipts) or as a tax-free income-style payment.

Who Might Need It?

While not everyone needs long-term care insurance, it can be a smart addition for those concerned about:

Protecting retirement savings
Long-term care can cost thousands per month. Insurance helps prevent withdrawals from RRSPs, TFSAs, or investment accounts.
Avoiding dependence on family
If you prefer not to rely on children or relatives, this coverage allows you to hire professional caregivers or choose assisted living on your terms.
Planning for longer life expectancy
More Canadians are living into their 80s and 90s, increasing the likelihood of needing care.
Having more control over care options
Private rooms, in-home care, or facilities with shorter waitlists often come at a premium. Insurance gives you choices that public coverage may not.

Tip: The ideal time to apply is in your 50s or early 60s, before health issues arise. Premiums increase with age and poor health may limit your options.

Typical Features of Canadian Policies

Feature	Details
Eligibility trigger	Inability to perform 2 or more ADLs, or diagnosis of cognitive decline
Benefit amount	Often between $1,000 and $5,000 per month
Benefit period	Common options include 2, 5, 10 years, or lifetime coverage
Waiting period	Usually 30 to 90 days after care begins before benefits are paid
Payment type	Income-style or reimbursement depending on policy

Some policies also include inflation protection, return of premium, or shared coverage for couples.

Caution: Not all care settings are covered equally. Some policies limit coverage to licensed facilities or require specific types of documentation. Always confirm what qualifies before choosing a plan.

Who May Not Need It

Long-term care insurance may not be necessary if:

You have significant personal or pension income that would easily cover care costs
You plan to downsize and use home equity to fund future care
You already have family members prepared to provide care and support