Just Retirement has launched an immediate needs annuity product to advisers in response to Government reforms to the long-term care market.
The 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 believes the reforms could be a “huge catalyst for growth”, and as a result is launching the ‘care funding plan’ – an individually underwritten annuity bought at the point consumers need care.
Options include income escalation to cover rises in care fees of up to 10 per cent or to match RPI inflation. Clients can also protect their capital, so if they die within the initial months after the plan starts the full sum is refunded.
Just Retirement group external affairs and customer insight director Stephen Lowe says: “Long-term care reform could be a catalyst for huge growth in the sector, as research suggests six or seven times more people could benefit from immediate needs annuities than currently buy one.”
LEBC divisional director of savings and investments Kay Ingram says: “Most people who enter care will have to pay considerably more than £72,000 so there is clearly a need for more products like this. Hopefully additional competition will also drive down costs and charges.”