Updated: April 2025  |  bremo.io financial guides

Long-Term Care Insurance Canada: Is It Worth Buying? 2025

Long-term care insurance (LTCI) is one of the most debated products in Canadian financial planning. It covers the cost of personal care — whether at home, in a retirement residence, or in a long-term care facility — when you're no longer able to perform basic activities of daily living on your own. It can be enormously valuable, but it's also expensive, complex, and not available to everyone. This guide gives you an honest assessment.

What Is Long-Term Care Insurance?

LTCI is insurance that pays a daily or monthly benefit when you require assistance with activities of daily living (ADLs) — typically two or more of: bathing, dressing, toileting, transferring, continence, and eating. Benefits usually trigger when you can't perform a set number of ADLs independently, or when you have a cognitive impairment such as dementia.

Most Canadian LTCI policies pay an indemnity benefit — a flat daily amount regardless of what your actual care costs are. A common benefit structure might be $100-$200/day, which equates to $3,000-$6,000/month.

How Canadian LTC Insurance Works

• Waiting period (elimination period): Most policies have a 90-day waiting period before benefits begin. You pay out of pocket for the first 90 days of care.
• Benefit period: Policies typically cover 2, 5, or unlimited years. Unlimited benefit periods cost significantly more but provide the most protection.
• Inflation protection: An optional rider that increases your benefit amount annually (typically 3-5% per year). Essential given the rising cost of care.
• Premiums: Paid monthly or annually. Premiums are level (fixed) for the life of the policy in most cases, though some older policies allow rate increases if a class of insureds experiences worse-than-expected claims.

The Cost of LTC Insurance in Canada

LTCI premiums vary based on your age at application, gender (women pay more because they tend to live longer and need care longer), health status, and benefit structure chosen. Rough ranges for 2025:

• Age 55, $150/day benefit, 2-year benefit period, no inflation rider: approximately $150-$250/month
• Age 55, $200/day benefit, unlimited benefit period, 3% inflation rider: approximately $300-$500+/month
• Age 65, same benefits: premiums are 30-60% higher than at 55
• Age 70: increasingly difficult to qualify; premiums significantly higher where available

Premiums are not tax-deductible for individuals in most provinces, though some business owners may have options. Benefits received are tax-free.

Who Offers LTCI in Canada?

The Canadian LTCI market is smaller than in the US. Major providers include:

• Manulife
• Sun Life
• Canada Life
• RBC Insurance
• Industrial Alliance

Product availability and specific policy features vary by insurer. Working with an independent insurance advisor who can compare multiple products is strongly recommended.

The Case For Buying LTCI

• Protects your estate: Without insurance, care costs can quickly deplete assets you intended to leave to family.
• Protects your spouse: If you need care while your spouse is still living, your assets may be depleted — leaving your spouse with less.
• Provides choice: Insurance income gives you more options for care settings, including private rooms, premium retirement homes, or extended home care.
• Peace of mind: Knowing care is funded removes a significant source of anxiety for both you and your family.
• Tax-efficient: Benefits are received tax-free.

The Case Against (or For Self-Insuring)

• Expensive: Premiums can total $50,000-$150,000+ over a policy lifetime.
• May never be used: Many people die without needing significant paid care.
• Coverage uncertainty: Pre-existing conditions can make you uninsurable, or policies may exclude conditions you're most likely to develop.
• Rate increases possible: Some older policies experienced premium increases. Newer policies have more guarantees, but some risk remains.
• Self-insurance works well if you have substantial assets: Canadians with $1.5 million or more in liquid assets can often fund care from savings and may be better off self-insuring.

The Middle Ground: Hybrid Products

Some life insurance products now include a long-term care rider or "living benefit" that allows you to access a portion of your death benefit if you need care. These hybrid products are gaining popularity because:

• If you need care, the insurance pays for it
• If you don't need care, the full death benefit goes to your estate
• The premium is never "wasted"

These products are more complex and typically more expensive than standalone LTCI, but they appeal to those concerned about paying premiums they'll never "use."

When to Buy: Timing Matters

The best time to apply for LTCI is when you're in your mid-50s to early 60s. Reasons:

• You're most likely to still be insurable (in good health)
• Premiums are lower than at older ages
• You lock in the rate before age-related premium increases
• You have more years to accumulate the benefit if you purchase a policy with cash value

Once you have a significant health condition — heart disease, diabetes, cognitive changes, mobility limitations — you may become uninsurable or face exclusions. Don't wait too long.

Questions to Ask Before Buying

• What triggers the benefit? Exactly how many ADLs must be impaired?
• Is there inflation protection built in or as a rider?
• What is the benefit period, and what is the maximum lifetime benefit?
• What is the waiting period before benefits start?
• Is the premium guaranteed level or can it change?
• What conditions are excluded?
• Does the policy cover home care as well as facility care?