Property bond launched to address long-term care funding crisis

Shaw Insurance has launched a care property bond in response to the escalating care crisis in the UK. The product works by bridging the gap between the applicant’s pension income and their long-term care fees. It allows the applicant to pay for care fees without having to sell their property on the open market.

Their property will be swapped for the care property bond and a loan is secured against the property to finance a monthly income payment to cover the shortfall between their pension income and care fees.

Shaw Insurance says the loan is repaid by letting out the borrower’s home to tenants. Their family can inherit the net equity in the property or can continue with to rent it out until the loan is cleared. This way they meaning they inherit it debt-free.

Distribution of the product will be strictly monitored and before being accepted, applicants must undergo an assessment of their individual care needs by specialist adviser to Shaw Insurance, My Care My Home. The applicant’s adviser will then be required to decide whether the bond is an appropriate option for their individual circumstances.

Paul Lewis: Care Isa is not the answer to long-term care crisis

Shaw Insurance chairman Malcom Cutts-Watson says: “Our hope is that the Care Property Bond can provide an alternative so that elderly and vulnerable people no longer have to make a pressurised sale if they don’t want to.”

“We have tried to design a product and a process to protect vulnerable people at what is often the most vulnerable stage of their lives and to give an alternative option to try and address that problem.”

Shaw Insurance is a wholly-owned subsidiary of the Shaw Foundation, an exempt chartity with an endowment of £15m to promote innovation in the provision of care in the UK.

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