Some TLC for LTC
Roy McLoughlin director, Master Adviser
Peter Wright director, Plan Money
Age UK has released a report on the causes of the crisis in long-term care provision and suggests one of a number of solutions would be the introduction of new insurance products for the wealthy to help meet their care costs. Do you agree that insurance for the cost of LTC is only ever going to be an option for the wealthy?
Wright: It is not the only option. I have not read the report and its findings yet but am urging the Government to look at pensions as a way of funding LTC. That would be useful for all areas of wealth.
We should not be just look-ing for one solution. There must be a range of solutions to fit a client’s circumstances. Insurance is a solution but not the only one. Whether this is high-net-worth or lower paid, there are other solutions.
McLoughlin: Unfortunately, I have experienced this through a family connection and I have to say it is utter chaos. This was a big subject matter about 10 years ago when there were a lot of products but it has almost become the forgotten subject. It needs to be brought to the fore and solutions have to be made that are equitable and fair throughout. We have seen in the last few days with Southern Cross just how much LTC costs and it is an unsustainable model and we need to be doing something as an industry to talk about it more but, more important, providers need to offer solutions.
Last week, Friends Life appointed Steve Payne as head of protection. Is this the right appointment for the unified Friends Life’s protection business?
Wright: I believe it is. Payne is a well respected figure in the world of protection and has a good track record for the work he has done at Bupa. It gives me confidence when companies have people of that calibre in charge. McLoughlin: Payne is very old-school and this is a good approach. He listens to people such as ourselves and this is very important as the last thing you want is insurance companies that bring out products when your first reaction is, “Have you ever met a real person?” Steve is a very approachable guy and an industry heavyweight who consults people at the coalface.
The ABI recently released guidance for providers to speed up life insurance claims and ease pressure on the recently bereaved. Do you expect the guidance to speed up the process significantly?
Wright: There is always a danger when you try to speed up a process that is not so slow in the first place that corners can get cut and service standards can drop but I do not think that is the case here.
By and large, life claims are not too slow but because of the sensitive nature of the process, anything that can make the experience better for the claimant has to be welcomed.
I would like to see as much attention as possible given to the overall experience of the claimant, not just the time the process takes. It is like hospital waiting lists, just reducing them does not necessarily improve the experience.
McLoughlin: Anything that is done to speed up claims is to be applauded. One of the problems we have as an industry is that claims still seem to take a bit longer to pay out than they should. It is a simple equation - someone pays a premium and if they die or have a critical illness, the insurance company pays out the benefits. If there are problems or delays in paying out the benefit, that creates a deeper mistrust of the industry with the general public.
I have not seen the details of what the ABI is doing but if it is broadly encouraging the industry to pay out quicker, it has to be applauded.