Many of us know or have known someone who needs care, perhaps a grandparent or elderly relative if not a parent. After all, one in four of us will need some form of long-term care in old age. When care is needed, lives are turned upside down and emotional stress can be placed on the family as well as on the individual.
I have emphasised this turmoil because it reinforces the importance of two points which are central to this article:
l Customers need a clear understanding of the benefits they can expect from LTC insurance if they need care, and
l Those benefits must be delivered in a way which eases the burden on the people directly concerned.
It is equally important for IFAs to be aware of these benefits and the claims' process which triggers them when discussing LTC planning with their clients.
LTC insurance is unlike other forms of insurance. When a claim is accepted, the provider is not simply paying a one-off sum but is promising to provide both financial support and practical advice, probably for the rest of the insured's life.
The Treasury's recent proposals for Cat standards highlighted the importance of clarity in areas such as the provision of practical advice to policyholders.
The standards proposed that key features of an LTC insurance policy should include:
l Information on how the policy interacts with state benefits, where to get advice about support services and a commitment to let the customer know if there are significant changes in state benefits or the relevant tax rules affecting long-term care.
l Annual visits to claimants or their personal representatives.
The Treasury went on to emphasise the importance of sensitivity in handling claims and in delivering benefits to people. This is absolutely right and one of the main reasons why the proposal for Cat standards also recommended that each provider should have some form of support service to offer advice and guidance to claimants.
The better providers already meet this Cat standard as they offer a care support service which is available to all customers from the day they take out a policy, not just from the point at which the claim is accepted. A good care support service should provide advice in a range of areas including:
l Equipment and adaptations to enable independent living.
l Local care agencies.
l Local residential and nursing homes, respite and hospice care.
l Support groups.
l Voluntary and charitable agencies.
When a claim for LTC benefit is made, there is an assessment period (usually 13 weeks) during which reports are obtained from the customer's GP and any external consultants involved. No benefits are paid out during the assessment period.
Towards the end of this time, a qualified independent assessor will carry out a final assessment of the level of care and assistance needed, without reference to the claims'criteria involved.
In this way, customers can be reassured the report is truly independent and unbiased.
It is worth remembering that the illnesses of old age often creep up and become increasingly debilitating over a period of years.
The point of claim for a LTC insurance policy is often less clear cut than for a younger person who has a diagnosed condition which needs treatment.
Since people tend to have good days and bad days, the consistent picture built up over time is much more effective than a snapshot on any one day as a method of reaching the claim decision.
Based on our own claims' experience, the two main triggers for an LTC claim are dementia at 37 per cent and stroke at 20 per cent.
An interesting political aside is that the 37 per cent with dementia would appear to reap little or no financial benefit from the Government's proposals for free nursing care. These people are more likely to need high levels of personal care and supervision which is still means-tested. This is likely to mean that clients will still have to fund all of the care themselves.
Once a claim has been accepted, the better providers assign a care counsellor who works alongside a care support service to look after the customer. Care counsellors provide emotional as well as practical support to the individual and their family. For example, the counsellor may suggest a care package, either suggesting a suitable homecare service or identifying appropriate nursing homes.
In general terms, the care counsellor must assess the needs and expectations of the customer and the ways in which these can be met by the service organisations involved.
Most people want to stay in their own home for as long as possible. In our own experience two out of three claimants choose, and are able, to receive care at home. The care counsellors and care support service play a key role in helping these people to remain as independent as possible.
For example, mobility is a common problem and advice may be needed so the home can be fitted with equipment such as grab-rails or stairlifts.
Policies that pay out benefits in cash can also help customers who want to choose the type of care they need. Everyone's needs are different, particularly those areas which are important to their way of life or their dignity.
Policies which offer cash and have no restrictions in the definition of care services mean claimants have full control over how the benefit is spent.
To make life more comfortable, they may want a home hairdresser, chiropodist or gardener. Perhaps more important, their disability, for example, a stroke, may require extra support from a speech therapist or physiotherapist, which some providers do not classify as care services.
A care support service, particularly with care at home, can give advice on how the customer can best maintain their quality of life as well as making appropriate care provision.
From the IFA's viewpoint, helping a client to select an LTC insurance policy is not just about asset protection and about the direct costs of care. It is also as much about how the claim is managed and the care is delivered. Understanding more about this will, I hope, provide you with some insight when discussing LTC insurance with your clients.