The long-term care market is currently poorly served, with just a handful of plans to choose from and just two main providers offering annuity-based immediate care products.
However, this is not the only cause for the market shrinking.
Our research shows that relatively few advisers are currently advising on long-term care at all, with 8% recommending risk-based long-term care products, 9% of advisers claiming they take long-term care considerations into account within their pension planning recommendations and a further 5% including this cover in their clients’ investment portfolios.
This suggests that if the market is to flourish then more commitment from the adviser community will be required.
The costs of staying in a care home are significant and vary considerably from region to region, with the average figure for the UK around £3,000 a month. This alone demonstrates the usefulness of long-term care products for many in this situation.
Is there still a future for long-term care products?
One of the main reasons that advisers give for not advising on long-term care protection is that they are not licensed or qualified to cover this insurance area.
The report of the Commission on Funding of Care and Support Fairer Care Funding made 10 recommendations, three of which have presented the insurance industry with potential opportunities. These were:
- A lifetime cap on care costs payable by the individual
- A more favourable means test for those who require some or all of their care costs to be state-funded
- People in residential care should make a contribution to their living costs
Our research shows that only 20% of advisers approved of Dilnot’s proposals. However, if the Government does adopt Dilnot’s proposals or other similar ones, it is likely to open up the product market and offer clear product sales opportunities for advisers.
Our insight paper on long-term care looks at the issues surrounding this sector, including:
- Analysis of the current care system and the long-term care market landscape
- Considerations for long-term care planning
- How the Dilnot report will affect the industry
- The suggested proposals that could offer more sales opportunities for advisers