The insurance Implications of Living Longer

Friday, August 28, 2015

seniors-living-longerFifty is the new forty. Eighty is the new seventy. Canadians are living longer than ever. Life expectancy has been steadily rising since the 1920s.

In 2013, anyone 60 years old could expect to live another 20 years on average. That’s two years longer than in 1990. By 2030, women can live to be 85 years old on average, and men can live to be 78 years old on average.


While this is great news, living longer means we need to have the income to support ourselves longer. It also means we may require healthcare assistance for many more years. With these important considerations in mind, there is a very real need to examine the implications that a longer life has on insurance.

Health insurance fills in the gaps

While Canada has one of the more enviable healthcare systems in the world, it is not without its shortcomings. There are many healthcare costs that Canadians must cover themselves. Each province has a health plan that provides special benefits coverage for seniors, but there are also restrictions.

If you currently work for a company with a health benefits plan, and are close to retiring, inquire about extending your health benefits. However, with former employees living longer and healthcare costs increasing, more and more companies are discontinuing this practice, so even if your company offers it now, be aware that it may change in the future.

To fill in the gaps, and have peace of mind that health expenses will be covered, a supplemental health insurance plan may make sense. A health insurance plan, such as Alberta Blue Cross , will reimburse you for costs that are not covered by provincial health plans, such as dental and vision care.

Long-term care insurance for an elderly population

Even though advances in medicine and healthcare have made us all healthier, there is a strong likelihood that in the twilight stages of life, we will need special care in our homes or a long-term care facility. With healthcare costs rising and a growing population, coverage gaps in provincial insurance plans will likely widen over the years, placing the cost responsibility on you. Healthcare expenses can quickly drain your savings, assets and retirement income, and perhaps even place additional financial burden on other family members.

Long-term care insurance helps to cover the costs of long-term care, preserving your assets and taking the weight of extra costs off your loved ones. Long-term care insurance provides financial support if you become incapable of caring for yourself due to a chronic illness, disability, cognitive impairment (Alzheimer’s Disease or other dementia), or natural aging conditions.

Life insurance considerations

Many seniors allow their life insurance policies to expire because they carry little or no debt, have significant savings and are financially comfortable. But living longer costs more. If you outlive your retirement savings, you may find the need to sell or borrow against assets, or borrow money from the bank or family members to cover living expenses, leaving a financial burden for your surviving spouse or adult children.

You may want to consider extending your term life insurance or looking at a new plan. Many insurance companies now offer life insurance up to age 85. Preferred rates are available to those in good health and with an excellent family health history. However, in general, the rates vary quite a bit between the ages of 65, 75 and 85 so the best time to buy life insurance is now.

You can also purchase last-to-die coverage at a lower rate than traditional life insurance. This form of insurance is used primarily for estate planning and pays out a tax-free death benefit upon the passing of the last surviving spouse.

Most of us can look forward to a longer life. Talk to an agent about your insurance requirements to ensure that you can relax and enjoy your retirement years to their fullest.

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