Manulife Financial is launching a new annuity, called the Manulife Nursing Care Income Plan, that is designed to cover the costs of caring for the elderly.

“Through one up-front investment, this annuity provides families with a better option to more effectively cover ongoing bills for nursing care,” said Bruce Gordon, Manulife Financial’s executive vice president of Canadian operations in a news release.

With Canadians living longer Manulife has perceived the need for a new product that will finance long-term care for the elderly. Both nursing home care and home health care can be expensive — and costs are rising.

All Canadian provinces have user fees for nursing homes, with accommodation costs partly paid by the resident’s province, while the residents or their relatives cover some of the costs. Maximum fees vary from a low of $11,900 a year for a single room in Alberta to a high of $57,240 in Nova Scotia. Costs for top-of-the-line private care can exceed $80,000 a year

The plan takes a one-time investment and uses it to provide a guaranteed lifetime income with the monthly cash flow fixed up-front, regardless of how many months or years the income is needed.

The investment necessary to provide the desired income is much lower than the cost of a traditional annuity, particularly if the annuitant suffers from a serious health condition. The plan requires a minimum $25,000 investment and is available to those 45 or older.

Nursing care patients with a serious medical condition such as cancer, stroke, chronic heart disease or Alzheimer’s will generally qualify for the plan.

To determine their reduced life expectancy, Manulife uses a medical assessment method that was designed especially for nursing care patients, unique in Canada and exclusive to Manulife.

For example, an 83-year-old woman with Alzheimer’s facing fees of $21,600 a year for nursing home care could cover that annual $21,600 cost indefinitely with an investment of $67,888 in the plan.

By taking her health condition into account, the plan saves as much as $78,380 for her and her family, compared to a traditional annuity based on her age alone.