As the population ages and life expectancy increases, the need to plan for long-term care increases as well. With this in mind, Toronto-based Manulife Financial Corp. has introduced a new wrinkle to its LivingCare LTC insurance product — shared coverage option for spouses.

LivingCare is designed to provide individuals and/or couples — married or common-law — with monthly income to pay for at-home or facility care. The policy owner can use the income as he or she chooses — for professional or non-professional care services, to make home modifications or to acquire medical equipment. The monthly income will double when facility-based care is used.

“The shared coverage option is more affordable than two individual policies,” says Paul Smith, vice president of marketing and product development at Manulife in Kitchener, Ont.

A survey of 1,008 Canadians conducted by Manulife in May 2007 found that Canadians are worried about LTC, not only for themselves but also their partners. The survey showed that 57% of res-pondents between the ages of 35 to 75 are worried that they or their partners will need LTC and were concerned about their ability to pay for it.

The survey also found that 82% of Canadians would probably purchase LTC insurance to avoid being a burden to their families. More important, however, only 21% of Canadians had factored LTC costs into their retirement planning.

Under the LivingCare policy, a monthly benefit is paid if the policy owner cannot perform two of six activities of daily living, which include bathing, eating, dressing, using the toilet unassisted, transferring, and maintaining continence. The waiting period for the LTC benefit is either 90 or 180 days. The longer the waiting period, the lower the premiums.

The benefit depends on the amount of insurance chosen, the benefit option selected and the care setting (facility or non-facility). For an individual, the minimum amount of insurance is $25,000 and the maximum is $1 million. These amounts double for the shared coverage option.

The benefit option, which is based on a percentage of the amount of insurance, can be 0.5%, 1% or 2% for single life coverage; and 0.25%, 0.5% or 1% for shared coverage. The maximum monthly benefit for non-facility care is $5,000 and for facility care, $10,000.

With the shared coverage option, the couple gets benefits from the same “pool” of money, which is the insured amount. One or both individuals can receive benefits under this option.

LivingCare is available for individuals between 18 and 80 years of age. Premiums vary with age, the amount of insurance and the benefit option. For instance, a 50-year-old male who acquires $500,000 coverage and chooses a benefit option of 0.5% would pay $1,500 annually for individual coverage. The same coverage under the shared benefit option would cost $2,500 annually. Typically, the premiums for individual coverage for females can be 25%-40% higher.

Clients have a choice of paying their premiums over three durations: pay to age 100; make accelerated payments over a 15-year period; or pay to age 65.

The last option is available only to single life plans for individuals between the ages of 18 and 50. Smith says that the accelerated payment options are a great way for younger clients to have paid up coverage before they retire.

Clients who are concerned that they may not use LivingCare benefits can purchase a return-of-premium rider. The amount of premiums returned is equivalent to the sum of premiums paid less any benefits paid or payable when the insured person dies or, in the case of shared coverage, the last person dies.

An inflation-protection rider can also be purchased.

One of the significant differences between Manulife’s previous LivingCare program and the new one is that the policy owner does not have to provide receipts in order to claim eligible benefits, says Smith. He adds that the benefit does not depend on the actual cost of care, nor does the policy owner have to report on how the money is spent.

However, in examining the suitability of the product for clients, advisors should note benefits can run out under this policy, compared with policies that pay a lifetime benefit, says Tim Landry, director of living benefits with MSA Financial Services in Montreal.

As well, advisors should ensure that the cost difference for couples (vs individual policies) is significant enough to make the coverage attractive, says Lawrence Geller, president of L.I. Geller Insurance Agencies Ltd. of Campbellville, Ont. IE

@page_break@