Legislative uncertainty and lack of regulation mean long-term care insurance could be being miss-sold, according to a leading campaigner for the elderly.
Association of Retired Persons Over 50 director of social policy Don Steele says LTC is being sold without full knowledge of what the level of free healthcare will be and to what extent regional variation will affect the cover needed.
He says state provision in Scotland is already expected to be higher than in England and Wales and could include free personal care.
IFAs run the risk of overcompensating on cover for LTC policies, leading to advisers potentially arranging thousands of pounds worth of unnecessary cover.
The warning comes as the Health and Social Care Bill, which provides for free nursing care, is to receive its final reading in England and Wales in the House of Lords on Thursday. Any delays would result in it being abandoned before the expected general election.
The Treasury is considering the details of plans to regulate long-term care.
Steele says: “There has been a danger of miss-selling down the line. Only one in five people might need it and nobody knows quite what they will be getting free from the state. I do not doubt the integrity of the providers but I would advise people to hold their horses.”
Norwich Union long-term care strategy manager Sandy Johnstone says: “There is LTC limbo at the moment. We would prefer to be trading in a market where there is certainty. IFAs can only advise on the present circumstances. NU has pledged to rebate customers if legislative changes mean that they need less cover.”
Bupa Health Assurance head of operations Brian Bartley says: “Everyone should check their provider's position on refunds. We recognise that LTC is bought by people who are vulnerable or will be vulnerable by the time they use it.”
Sir Stewart Sutherland, who chaired the royal commission on long-term care which recommended free nursing and personal care for the elderly in 1999, last week became one of the first “people's peers”.