Canadian Finance Blog

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Insurance You Can Do Without – Long Term Care Insurance Posted: 11 Apr 2011 02:00 AM PDT Long term care insurance is designed to pay out a benefit should you need retirement care such as assisted living, home care or nursing home care. However, long term care insurance may not provide what you expect or might not pay out at all when you need it. Why you might want to avoid long term care insurance First off, you could easily pay thousands of dollars in premiums for insurance you may never need to collect. There are obviously worse things than never needing long term care insurance, but what if you do need to collect on the insurance but the insurer denies your claim? There are many stories of this happening. Whether the insurer does not agree that a certain diagnosis is covered or doesn’t pay as much as expected, these are possibilities you should be aware of. Unfortunately, there’s no way to know in advance if you’ll have any issues when you need to collect on your long term care insurance. Another issue with long term care insurance is rising premiums. While you might pay reasonable premiums for a decade or two, as you get into your later years, the insurer may start raising your premiums by as much as 50% to compensate the additional risk they take on as you get older. Alternatives to long term care insurance If you are concerned about your health in your later years, you can likely put your money better use in an RRSP or Tax Free Savings Account. This can serve as a form of self insurance where you’ll have the money available when you need it, without having to jump through any hoops and red tape. You should also consider critical illness insurance. This form of insurance pays out a lump sum when you are diagnosed with a major illness. Not only can you use the money how you see fit, but it has a better track record of paying out for the covered illnesses.   Related Posts: Insurance You Can Do Without – Credit Life Insurance Insurance You Can Do Without – Cancer Insurance Insurance You Can Do Without – Credit Card Protection Insurance Insurance You Can Do Without – Long Term Care Insurance originally appeared on Canadian Finance Blog on April 11, 2011.

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