Informing Canadians about long-term health insurance

Why do Canadian seniors display such a lack of interest in some potentially beneficial financial products such as long-term care insurance? This, along with a few other unresolved questions, has been addressed by a research programme supported by the Retirement and Savings Institute, HEC Montréal (RSI).

DATA ON SCARCELY STUDIED ISSUES

The RSI seeks to shed light on important issues related to retirement, savings and insurance, in a context where investors are not very financial literate. Since its inception in late 2017, the Institute has been conducting complex behavioral surveys on these issues that are often neglected by Canadian academic research, and it makes such data available to researchers.

Learn more about the RSI’s web surveys
 

MANAGING FINANCIAL RISKS ASSOCIATED WITH OLD AGE

The first series of surveys conducted by the RSI focused on the tools made available to seniors, current or future, to deal with the financial risks they face: long-term care insurance, annuities and reverse mortgages. These surveys led to the publication of research papers and scientific articles, as well as a workshop-conference to communicate these results to professionals in the insurance industry and financial services.

WHAT CAN WE LEARN ABOUT LONG-TERM CARE INSURANCE?

Although nearly half the Canadian population aged 50 will require long-term care, which can sometimes be very expensive, only a few buy an insurance against the potentially catastrophic costs of such care.

Why such a lack of interest?

• Is it because there’s no demand? Because the product is too costly? Because people are not aware of the risks they are exposed to? Or perhaps thanks to the generosity of governments? The respondents’ replies do not support the multiple possibilities considered by the researchers.
• In fact, the latter found that most of the respondents who do not have long-term care insurance say they have never heard of such a thing and do not know what it is. For their part, experts from the financial industry have raised issues of product distribution.

This insurance is therefore a potentially valuable product that a quarter of the population might require. But its penetration is less than 10% in Canada, mainly due to a lack of information about its existence, modus operandi, and utility.