Long-term care. All of you will have heard of it, some may have even
advised in this area but most of you may prefer to put off thinking about
it for a few years yet. It is probably filed under “good potential” or “not
core business” or “must get round to thinking about it one of these days”.
If this is the case, you could be missing a big business opportunity now.
More important, your clients could end up depleting the very assets that
you have helped them build up and safeguard.
Research, carried out for PPP lifetime care by theBritish Market Research
Bureau in May this year, canvassed the opinion of a nat-ionally
representative sample of 920 adults aged 20 and over and shows that your
clients are already thinking about this issue.
They know if they have assets they will have to pay for their own care
and, perhaps most important for you, they want financial advice on
long-term care planning.
The key findings from the research indicate:
People believe there is a one in two chance they will need professional
care in old age.
Within the AB social group (those most financially at risk), four out of
five people believe they will have to contribute towards the costs of such
Two in five of these people expect to consult an IFA about covering
themselves against the cost of care.
IFAs then have a crucial role to play in ensuring their clients are
protected from the costs of care.
The average cost for a year's stay in a nursing home is £19,084
(Laing and Buisson, 1999) and the cost can be much higher in London and the
South-east. It would not take long for these costs to make a serious dent
in someone's savings and assets.
The research also shows that nearly half of adults know at least one
elderly personin need of care – on average, they know two – and one adult
in seven is involved in pro-viding care for at least one elderly person.
So people are very aware of the burden of care and they want advice on how
to plan for it. But I believe the ball is in the IFA's court in raising the
issue. So, when are the most appropriate times to discuss LTC with your
Retirement planning is the most obvious time to discuss the protection
offered byLTC insurance.
You will probably be exploring ways of using the lump sum from a pension
as your client's financial situation changes to asset-rich, income-poor. A
healthy portfolio is good news but what might happen to those funds if the
need for care arises?
If you have recently advi-sed on investment businessor inheritance tax
planning, there is an ideal opportunity to revisit these clients and ensure
their estate is also protected against LTC costs.
There are products on the market that will pay for care costs and return
your client's initial investment, whether or not they need care. This is a
straightforward and attractive proposition to discuss with your clients.
These are just a couple of examples and most providers offer dedicated
helplines to support your sales and marketing activities.
This can take the form of relevant facts and figures on care costs, the
basic product features and benefits andfurther ideas on how to approach
The Government will very soon outline its recommendations on funding LTC
but itis clear that many elderly people who have a reasonable level of
assets will still be liable for a substantial proportion of care bills.
IFAs have an important role to play in ensuring their clients get the
choices they want if the need for care arises.