Now that the final pieces of the Government's long-term care jigsaw are being put into place, you will all be aware that elderly homeowners will continue to have to pick up a major part of their nursing-home costs. The Government recognises the role that long-term care insurance can play and aims to protect the consumer through Cat standards and eventually through full regulation.
It feels that these safeguards will give the public confidence to explore this form of protection. Therefore, Cat standards and even regulation should be a real benefit to sales because they will provide reassurance for the public.
So, 2001 shows significant potential for the development of the LTC market. Let us just remind ourselves of some basic facts. One in four people will need long-term care in old age. The most published statistic over the last few years is that 40,000 homes have been sold by elderly people each year to pay for care. State help with nursing costs will make a welcome contribution but a proposed means-test threshold of £18,000 will not let homeowners off the hook, with average house prices running at over £80,000.
Setting house values on one side, clients who feel they can cover the initial costs of care and, if and when their assets fall below the means-test threshold, they can leave the state to pick up the bill, need to think carefully about what this implies.
What if an elderly person in need of care has chosen a nursing home near the family, where there is a pleasant view from the window of their private room which makes their infirmity more bearable? They feel as comfortable as possible with their surroundings. Without going into detail, the nursing home of their choice is almost certainly more expensive than one which the local authority budgets for. When the money runs ou,t how are they going to fund the difference to stay in their chosen nursing home? Or will it now be necessary to move to a cheaper home?
If a couple is involved and there is no insurance, the decision to spend savings on a more expensive nursing home is a hard one to make. There is always concern about the financial welfare of the partner who is not ill and likely to survive longer. This needs to be discussed when exploring the cost implications of long-term care.
Another important sales point is that long-term care is not just about nursing-home care, as most people will want to receive care in their own home for as long as possible. Even if they receive care at home, the question you need to ask is: how will they fund those parts of life which are important to them but which suddenly become difficult? These might include looking after the garden, moving from one part of the house to another and getting around to see friends and relatives, to name just a few. All these costs mount up and cash benefits can help fund individual needs, which can make life more bearable.
The impact of care costs on an estate after a few years in a nursing home is considerable. The time to talk to clients is when they are planning or organising their retirement finances in their 50s and 60s. You can talk to them about the choices they want to make rather than dwelling on the detail of sickness in old age.
One reason why this is a market with such potential is that customers have told us they want to protect their independence as much as they want to protect their assets.
Paul Bennett is marketing manager at PPP lifetime care