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Sesame sees no future for long-term care cover

Sesame is predicting the demise of the long term care insurance market as sales have remained stagnant despite widespread predictions it was set to take off.

Research manager Dale Tranter has carried out a review of the market and concluded that although the pension age continues to increase, the amount of LTC cover being sold is steadily decreasing.

ABI statistics show prefunded LTC policies sold annually have dropped by nearly two-thirds over the last six years to 2,851 last year from 8,080 in 1996.

The only growth area has been immediate needs&#39 LTC annuities.

Tranter believes insurance companies cannot be making much money from the sector and predicts the market will become the domain of providers able to make money elsewhere and offering LTC as a sideline.

He believes the recent withdrawal of Prudential International, which was the market leader for LTC bonds, was significant, saying that if it was unable to make money, then other providers will struggle.

IFA Care chairman Graham Fidoe believes the need for LTC insurance remains great, particularly so when most of the baby boomers reach their 60s and 70s and become concerned about funding their care needs.

Tranter says: “Long-term care policy sales are heading south. I cannot see any prospect of a turn-round in the next few years or in the medium term.”

Fidoe says: “The case for long-term care is very strong. We need to look at our marketing and change people&#39s perceptions.”

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