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Aegon eyes UK LTC market but others are more cautious

Aegon hq 480

Aegon says it is eyeing the long-term care market following this week’s Government reform plans, although other insurers are less positive about the potential to offer cover up to the proposed cost cap.

This week, health secretary Jeremy Hunt told Parliament he wants to implement a £75,000 cost cap, increase the upper means-tested threshold to £123,000 and introduce an annual “hotel costs” cap of £12,000, all by April 2017. He told MPs he hopes the package will lead to insurance or pension products being created.

An Aegon spokesman says: “These proposals enable providers to think about solutions for long-term care and it is definitely something we will be looking at now. We have experience offering these sort of products in America so we already have a lot of the expertise in place.”

There are currently only two active providers in the UK LTC insurance market– Partnership and Friends Life. Both offer ‘immediate needs’ annuities with income paid to the individual’s registered care provider. The plans are individually underwritten and are based on the individual’s age and state of health at the time of application.

Partnership managing director of care Chris Horlick says: “I doubt this announcement will lead to a glut of insurance providers coming into the long-term care space.

“We do not think pre-funded care insurance, for example, is likely to take off for a number of reasons, namely customer inertia and the uncertainty for insurers about how much someone’s care will cost in 40 years time.”

Horlick says he expects the Government to explore ways of linking care funding with pension saving.

He says: “If people are encouraged to save much more into their pensions, I think more flexibility around pension usage would be a good thing.

“I am in favour of Government incentives in this space. For example, if someone said they were going to use their tax-free lump sum to pay for care costs then the Government could offer to match them pound-for-pound.

“I think the Government will explore linking pensions and care.”

An Aviva spokesman says it is “still early days for the industry in terms of any potential move towards products” while Standard Life and MetLife say they have no plans to offer LTC insurance products.

The Dilnot Commission report suggested providers could develop ‘disability linked annuities’, whereby payments are increased if a person becomes disabled.

However, writing exclusively for moneymarketing.co.uk, Strategic Society Centre director James Lloyd said the funding model proposed by the Government will result in “negligible” use of DLAs in the future.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. “use their tax-free lump sum to pay for care costs”

    It seems the PCLS is everyone’s favourite panacea!

  2. Let’s see if Aegon is prepared to put is money where its mouth is and offer pre funded care plans with GUARANTEED rates.

    Any adviser that recommends reviewable plans deserves every single misselling claim that comes his way.

  3. These products were a waste of time when they existed, the real issue is whether it is sensible to send billions of pounds of taxpayers money to foreign governments in so called “aid” without ensuring sufficient checks and balances so that they could prove the money was wisely apllied, or pay for looking after the older generation now retiring who have funded the country for decades and have little chance of benefiting from their hard work.

    The governments policies ignore the needs of the indigenous population and prefer to fund dictators and thieves so that they appear to be so called helping the third world.

    I am soon to join the regiments of the allegedly elderly in a year or so’s time and they will drag me kicking and screaming out of my home before I pay a penny for care costs, I would rather die wallowing in my own faeces thant fund this or any other governments largesse to people who once educated and healthy will probably turn against us in terror attacks.

    No doubt the people who review these comments will view them as inflammatory, they are meant to be, we should all get damned angry at the waste of our money and the rip off culture adopted by successive governments over the years.

  4. A picture of Ned Naylor wallowing in his faeces would make a terrific sales aid for LTC. Cheers Ned. I guess that is the choice the elderly face.

    As a young person I wonder if Ned has benefited from a final salary pension, colossal house price inflation and free university education during his life. Pay for the older generation? – any way up, whether the elderly pay it and leave less legacy, or the government pay out of tax income or the children of the person pay, it’s our generation that’ll pay for Ned’s care costs, so thanks for offering to live in squalor.

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