Both critical illness (CI) and long term care (LTC) insurance products have been developed in the last few years in response to advances in medical science, and the subsequent ability of patients to survive illnesses which were once a death sentence.

Accompanying these advances has been an increase in longevity due to our better understanding of diet, exercise, and general preventative medicine. However these advances have created potential financial problems for many patients who survive major illnesses and surgery. We are living longer, but often surviving with major health problems.

At the same time, many provincial and employer sponsored plans on which most of us have depended are paring down their coverage in an effort to control overall costs. Long term care can be defined as "a range of nursing and social services for people who need ongoing assistance." LTC insurance is a product designed to provide the financial resources to cover their cost for people who require daily assistance with the "activities of daily living" as a result of significant cognitive impairment or physical incapacity.

LTC policies are of two major types: one will pay a maximum fixed dollar for each week or month you receive covered services, and the other type will reimburse you (up to a preset maximum) for eligible expenses you incur. LTC insurance, like other types of insurance, can only be obtained prior to the onset of health problems, and is priced based upon the age at which you apply for the coverage. Unlike traditional disability insurance, which insures your income needs before you retire, LTC insurance does not replace lost salary, but rather provides financial support to assist you to maintain your quality of life no matter at what age you become incapacitated, through providing funds for care in your home or, when remaining in your home is no longer possible, for care in a long-term care facility.

Critical illness insurance helps people meet the one-time, transitional costs or short term, recuperative costs associated with surviving a critical illness. Depending on the insurer, the illnesses covered may include heart attack, stroke, coronary bypass, cancer, multiple sclerosis, kidney failure, major organ transplant, paralysis, blindness, and other specified illnesses. CI insurance will provide the insured with a lump sum cash benefit to be spent however the person chooses. Common applications for such funds include repaying a mortgage, renovations to a home to accommodate medical needs, purchasing assertive devices, defraying the costs of alternative or complementary medical treatment, and paying for additional nursing or home care not covered under provincial or employer plans.

The cost of CI and LTC insurance varies depending on the amounts you select, your age, health and other medical and lifestyle factors. Your professional insurance advisor can help in designing affordable coverage for you.

No insurance policy can replace lost health, but obtaining coverage for statistically probable events is a prudent strategy for preserving your financial independence.

Published by the Financial Planning Services Department of Clarica Life Insurance Company, Copyright 1999.

"Warren Tufts is currently a Financial Advisor with Clarica Life Insurance. Warren specializes in the Small Business market, and can be reached at: (403) 266-2061, est. 298 or Email: warren.tufts@clarica.com