Should You Buy Long-Term Care Insurance?

No offence intended, but Canada’s population is aging. In 2024 the average Canadian was 41.6 years old, according to Statistics Canada, and by 2030 roughly one in four Canadians is expected to be 65 or older. An older population drives higher demand for health services and long-term care, and preparing for those costs has become a financial priority for many households.

The National Institute on Ageing highlights that long-term care can be costly. Monthly fees for a long-term care (LTC) home begin around $2,000 for basic accommodations and can climb to $15,000 or more for a private room. At the same time, most Canadians would prefer to receive care at home: an Ipsos poll for HomeEquity Bank found 90% of respondents would choose at-home care, yet only 13% have a financial plan in place for it.

Home-based care carries significant expenses. In Ontario, personal support workers (PSWs) typically cost between $28 and $35 per hour. At-home nursing care is more expensive: a registered nurse can cost roughly $45 to $80 per hour, and physiotherapy visits can run from $90 to $150 per hour. Other costs include home renovations for accessibility, mobility aids such as wheelchairs or walkers, and services for home maintenance and transportation if you can no longer drive or perform outdoor tasks.

While government programs cover certain health-care services, many of the services needed to remain at home are paid out-of-pocket. Below are practical options Canadians use to help cover the cost of long-term care, with concise guidance on how each works and the main advantages and drawbacks.

What is long-term care insurance?

Long-term care insurance is a private insurance policy purchased to help cover costs related to extended care needs. When you buy the policy while you are healthy and working, you pay premiums so that if you later need help with daily living activities, the policy will pay benefits. Typical services covered include nursing care, rehabilitation, therapy, and assistance with tasks like dressing, eating, toileting, bathing, meal preparation, and laundry.

Michael Van Alphen, vice-president of insurance solutions at Sun Life, explains that long-term care insurance provides a weekly or monthly benefit to help policyholders manage the financial burden of care when they can no longer live independently. In Canada there are relatively few providers offering dedicated LTC policies, in part because insurers bear significant long-term risk and because earlier products had high premiums with little or no return if the insured died before needing benefits.

How long-term care insurance works

Policies typically define eligibility by a person’s inability to perform a number of specified daily activities on their own—such as bathing, dressing, toileting, transferring, continence, or eating. For example, some plans begin paying when the insured cannot perform two of six activities without assistance. Other policies may impose limits on total payouts or introduce waiting periods before benefits start.

What does long-term care insurance cost?

Long-term care insurance has evolved. Older products offered generous benefits with short waiting periods—often 30 to 90 days—so insurers charged higher premiums. Modern plans commonly include longer waiting periods, typically one to two years, which reduces premium costs. Contemporary annual premiums can range roughly from $1,000 to $2,000, depending on coverage, age at purchase, and health status. Some plans return paid premiums to a beneficiary if the policyholder dies before benefits begin.

Insurance pros and cons

• Pros: Provides coverage for many long-term care services and can guarantee payments for the duration of the insured’s eligibility under certain plans.
• Cons: Premiums can be expensive, and some policies impose longer waiting periods or caps on payouts.

Paying for care with a reverse mortgage

A reverse mortgage is another option for funding in-home care while allowing homeowners to remain in their residence. HomeEquity Bank notes that a reverse mortgage lets qualifying Canadians—typically age 55 and older—borrow against their home’s value and receive a lump sum, a regular payment, or a combination. The loan does not require monthly repayments during the borrower’s lifetime and generally does not affect Old Age Security (OAS) or Guaranteed Income Supplement (GIS) payments.

How a reverse mortgage works

With a reverse mortgage you can access a portion of your home equity—up to a certain percentage of the property value—and delay repayment until you sell the home, move out, pass away, or if the loan goes into default. Borrowers can choose to repay earlier if they wish. Reverse mortgages are often used to pay for in-home care, home accessibility upgrades, and other supports that government programs do not fully fund.

Reverse mortgage pros and cons

• Pros: Access to a lump sum or regular funds without selling your home, enabling payment for immediate care needs.
• Cons: The loan plus interest must be repaid by you or your beneficiaries when the home is sold, you move, or after death. The net proceeds remaining for heirs may be smaller than if you had downsized earlier.

Paying for long-term care from personal savings

Building personal savings for future care is another strategy. Starting early and incorporating a dedicated health-care savings goal into your financial plan can make long-term care costs more manageable. As you pay down other debts—such as a mortgage or student loans—you might reallocate funds to retirement and contingency accounts like a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). If you eventually move into a long-term care facility and have no surviving spouse, selling your home may cover part of the care costs.

Personal savings pros and cons

• Pros: Savings remain under your control and give you flexibility over how funds are used.
• Cons: You may not accumulate enough to cover long-term care, and without proper legal safeguards such as powers of attorney, you risk financial abuse if you become incapacitated.

Choosing the best way to pay for long-term care depends on your personal finances, health expectations, and housing preferences. Talk with a trusted financial advisor to assess what you can afford, the type of care you want, and where you prefer to live. Early planning gives you more options and helps preserve your comfort and independence as you age.

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