Just Retirement has launched an immediate needs annuity product to financial advisers in response to Government reforms to the long-term care market.
The Social Care bill, published last year, sets out plans to cap long-term care costs at £72,000 and increase the means-test threshold from £23,250 to £118,000 from April 2016.
Just Retirement says the reforms could be a “huge catalyst for growth” in the care market. As a result, the provider is launching the ‘Care Funding Plan’ – an annuity bought by consumers at the point they need care.
The plan is individually underwritten, with the income usually paid directly to the registered care provider tax-free.
Options include income escalation to help cover rises in care fees or to increase income by RPI inflation and a range of plan protection options which repay the money invested if the person dies within the initial months after the plan starts.
Just Retirement group external affairs and customer insight director Stephen Lowe says: “New rules are set to come into force in England in two years’ time which will ensure everyone except the very poorest will have to pay towards their own care.
“It could be a catalyst for huge growth in the sector, particularly as research suggests six or seven times more people could benefit from immediate needs annuities than currently buy one.
“Although the Government is planning to introduce a cap on care costs, the reality is that the majority of people who want more than basic levels of care in later life are still likely to spend many tens of thousands of pounds.
“Care funding plans guarantee regular income and reduce the risk of people’s estates being eroded by future care costs, giving them increased certainty as to what assets they are able to pass on. This is often a delicate stage of life where peace of mind and financial stability is important to the people needing care and their families.”