Demand for long-term care will rocket by around 60 per cent by 2050, leading to a significantly bigger market for LTC insurance, a major research project has predicted.
The research, conducted by the Cass Business School, in the City of London, and a Swedish economist has found that changes in demographics and the traditional family structure in Japan, Sweden, Germany and the UK will bring about a rise in care costs.
It predicts the cost of care will rise by 30 per cent in real terms over the next 50 years.
The study comes at a disappointing time for LTC. Scottish Widows will be closing its LTC plan to new business from May 24 as a result of reduced business opportunities and lack of volume.
However, the study estimates that by 2050, three million elderly people in the UK will require long-term care and the cost will rise from £11bn to £15bn. Pessimistic predictions indicate that the UK will have a shortfall of three million informal carers by 2050 based on each working a 20-hour week.
City University researcher Ben Rickayzen says: “Based on the UK experience to date and despite UK insurers' best endeavours, the market for LTC insurance remains very weak.”
A Wills & Co director Arnold Wills says: “The Government needs to get involved and perhaps provide some sort of tax incentive. There is a horrendous problem ahead both in terms of pensions and LTC.”