What is long-term care insurance?


As we age, we may require care to perform daily living activities. Long-term care insurance is designed to protect the high costs associated with requiring a nurse, home care aide, or other assistance. Coverage can start right away and last for a set number of years until you turn 65, or until you pass away.

By Kaitlyn Kokoska
Content Editorial Manager
10 min read

As we age, the need for long-term care becomes a growing concern. As much as we’d like to think that our children will take care of everything (and they might!) the cost for long-term care can still be an issue. Who will pay for the care? Can you?

If this is a question you worry about, long-term care insurance may be a solution for you. Oftentimes, long-term care insurance is confused with life insurance, disability insurance, critical illness insurance, or other medical-related financial products. Long-term insurance is a separate product—though often sold together with other more common insurance policies. 

Read on to find out exactly what long-term insurance is, who needs it, and how it differs from other products on the market.

Female insurance advisor in a video call appointment

Need insurance answers now?

Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below.

What is long-term care insurance?

Long-Term Care (LTC) insurance is a fixed income allotted to you if you can no longer support yourself. The money from this insurance is used to help people get the care they need when they can no longer complete Activities of Daily Living (ADLs) themselves. 

Activities of Daily Living include: 

  • Feeding yourself
  • Dressing yourself
  • Bathing yourself 
  • Toileting yourself
  • Moving yourself 
  • Maintaining continence
⚠️ Eligibility requirements:  Generally, if you are not able to care for yourself and require assistance with two or more of these daily activities, this insurance will help with the costs associated with your required care. However, each policy will specify what “dependent” living is and the requirements that need to be met before you can make a claim.

It can be difficult to imagine yourself in such a vulnerable place both physically and financially, and you may want to avoid thinking about it altogether. However, as we age the reality that we will require others to care for ourselves becomes unavoidable.

Reasons you could become unable to care for yourself could include:

  • A degenerative disease
  • Cognitive impairment (concussions, brain injuries, dementia)
  • Aging
  • Illness
  • Accident
  • A serious health condition

While we can’t stop many of these inevitabilities, we can protect ourselves financially. The best way to protect your future self and your family’s financial well-being is to create a plan now.

Nearly three-quarters of Canadians (74%) admit they have no financial plan to pay for long-term care if they need it.
- Leger Marketing survey conducted on behalf of the CLHIA

How does long-term care insurance work

Like other insurance policies, with long-term care insurance, you pay the insurance company your pre-determined premiums, and if you have to make a claim, the insurance company will pay out the predetermined benefit. With this policy, you essentially give yourself a payment plan for long-term care that’s spread out over the years, rather than having to foot the bill at once when you are most vulnerable.

Long-term care coverage generally covers care: 

  • At your house
  • At an adult day-care facility 
  • At an assisted-living facility 
  • At a long-term care facility
Plans are generally one of two types:

  1. Services-based long-term care insurance
    Your benefits are based on the long-term care services you receive. Each service will have a maximum amount covered per year. This type is similar to a regular health insurance plan.
  2. Income-style long-term care insurance
    Your benefit is a fixed monthly income to help you cover the cost of care.

How to set up long-term care insurance

Step One: Pick your plan 

You can purchase a long-term care insurance policy directly through an insurance company, or it may be provided to you through your employer. When choosing your plan there are some factors to consider: 

  • The price: How much can you afford to pay for premiums?
  • The benefit amount: How much will you reasonably need to cover your care needs when you’ll need care? Will you want it to be a fixed monthly amount or coverage per service?
  • The waiting period: Most policies have a waiting period (or elimination period) before you can make a claim. Sometimes this is 30, 60, or 90 days, but there are also policies with zero waiting periods. The shorter the waiting period, the more expensive the premiums will be. 
  • Benefit timeline: Some policies offer benefits for a 2, 5, or 10-year period, or even for a lifetime. Longer coverage will have a higher premium, but it’s a good idea to plan for the worst-case scenario—you wouldn’t want your benefits to run out when you need them most. 
  • Inflation protection: We already feel the impact of inflation, so if we can protect ourselves from the financial stress it causes, we should! When choosing benefit amounts and timelines, it’s important to consider that the cost of care will go up every year.

Our expert insurance advisors can connect you with one of our partner insurance companies to get you the best long-term care benefits for your needs. It starts with a simple phone call to discuss your insurance needs. Our empathetic and knowledgeable advisors can help you choose the plan that’s right for you!

Step Two: Submit a claim 

When the time comes, you’ll need to submit a claim to make sure your care costs are covered. Each policy will have its own criteria of what you can claim and when—as we mentioned, some policies have a waiting period before the long-term care insurance benefits kick in. You may have to pay out of pocket in the meantime. 

Who needs long-term care insurance?

Anyone who wants to ensure their care is covered if they are unable to perform daily activities should get a long-term care policy. But in particular, this type of insurance is important for:

  • Those who do not want to or cannot depend on their family to cover their long-term care costs
  • Those who have a family history of degenerative illness
  • Those who don’t want to dip into their retirement savings to pay for extra care  

Like health insurance, this product helps spread the cost and alleviate some of the financial burdens of healthcare.

What are the pros and cons of long-term care insurance?

Every insurance policy has pros and cons depending on what your financial goals are.

Pros Cons
  • Covers the cost of long-term care when you are most vulnerable 
  • Plans often let you choose whether your coverage is for in-home care or in-facility care 
  • Peace of mind knowing that your kids don’t have to pay for your care
  • May have age restrictions (sometimes to age 65) 
  • Some pre-existing conditions may prevent you from getting coverage 
  • Waiting periods may delay your coverage
  • You may require care for one of the daily living tasks and need financial support, but you haven’t met the eligibility criteria of not being able to do two of the six Activities of Daily Living (ADLs) 

How much does long-term care insurance cost?

You can expect to pay around $100/month for long-term care insurance. However, the cost of long-term care insurance depends on a number of factors:

  • Your age at the time you apply 
  • Your health status
  • The type and amount of coverage you choose 
  • The waiting period that you select 

While this may seem steep now, the cost of care can add up quickly. Consider that the average cost of retirement homes can range from $900 – $8,000 a month, depending on the facility and care you need. You could be paying upwards of $60,000 in “rent” for the support you need to live.

Is long-term care covered under my health insurance plan? 

Sometimes. Some health insurance plans will include coverage for in-home nurses or care homes. However, most plans will have lower coverage limits.

A health insurance policy might say: “$2,500 annual maximum for care homes & in-home care and a $20,000 lifetime maximum combined with medical equipment and services.”

When considering that care homes and care aides can cost upwards of $20-$30,000 a year, you can see why having this extra insurance is important. Health insurance is there to provide recovery and preventive costs—long-term care is there to help you field the ongoing cost it takes for long-term care.

What is the difference between long-term insurance and life insurance?

Long-term care insurance is designed to cover the costs of your care if you cannot perform basic activities of daily living by yourself such as feeding, bathing, toileting, or moving on your own. This insurance covers the cost of nurses, care aids, and facilities required for your daily support. 

Life insurance is a lump-sum payment, paid to your beneficiaries (usually your family) after you pass away. Some policies have “living benefits” that allow you to use your policy’s value to borrow or loan against. Some life insurance companies have riders that tack onto your life insurance policy—these riders let you use some of your death benefits to pay for your care needs. 

What is a long-term care annuity?

A long-term care annuity is a financial product that combines two things: a way to save money for the future (like an investment) and a way to pay for long-term care if you need it. With this annuity, you put money into it, and it grows over time. If you ever need help with things like bathing or eating because you’re sick or old, you can use some of the money you put into that annuity to pay for that care. But, using this money for care can reduce how much income you get from the annuity later on. So, it’s like having a backup plan for both saving and paying for long-term care.

When to buy long-term care insurance

As soon as possible! The younger you are, the less expensive the premiums are. Many companies offer a limited pay plan, meaning that you can pay for your coverage now, during your high-earning years, and get the benefits for free later if you should require it—for example, you only pay premiums for 10, 15, or 20 years and get coverage until you’re 65 or older.

What companies offer long-term care insurance?

At PolicyAdvisor, we work with over 30 of Canada’s best insurance companies. While we don’t provide long-term care insurance ourselves, we’re happy to connect you with one of our licensed partners that do!

The following is a list of our insurance partners that offer long-term care insurance: 

Speak to one of our licensed insurance advisors today to find out if a long-term care policy is right for you and your financial goals!

More choice. Lower price.
PolicyAdvisor saves you time and money when comparing Canada’s top health insurance companies. Check it out!

Get a quote for long-term care insurance

Again, we don’t directly sell this product, but we have some great partners that do! Give one of our expert insurance advisors a call! First, we’ll have a quick conversation about your insurance needs. This conversation will help us assess exactly what kind of coverage you’re looking for and point you to the best company to work with. We know how frustrating it can be to call around to a bunch of companies, so let us use our years of insurance expertise to help you find the exact coverage you need to achieve financial protection.

Schedule a call with one of our expert insurance advisors for one-on-one advice.

Need help?
Call us at 1-888-601-9980 or book time with our licensed experts.

  • Long-term care insurance covers the costs associated with when you become dependent on others
  • To qualify for coverage, you must need assistance with daily living activities such as feeding or bathing yourself
  • Policies can come into effect right away and cover you for a set period of time, until age 65, or until you pass away

By Kaitlyn Kokoska
Content Editorial Manager
Connect with author

Want more like this in your inbox? Subscribe to our newsletter.