Solving the UK’s care funding crisis one person at a time

Despite being a major societal issue, for years nobody has managed to come up with a workable solution. And left unchecked, the problem is only likely to get worse.

The simple fact is that, as a nation, we are getting older, with the average person now living into their 80s.

And over the next 15 years the number of over 65s is expected to rise by 4.5 million to 16.7 million, accounting for nearly one in four people, according to the Office for National Statistics.

As a result, one can safely assume that more and more of us will likely need to go into long-term care at some point in our lives.

Therefore, it has arguably never been more important to find a way to help our rapidly ageing society to fund care in their old age.   

But the problem is, how? In an ideal world, the Government would pick up the tab but, in reality, that is not possible. Therefore, it is left to the UK’s financial services industry to solve the funding shortfall.

Today’s system is set up so that people in England with more than £23,250 in savings or property have to pay for their care fees in full. The figure is £24,000 in Wales if you are cared for in your house or £40,000 if you need to go into a specialist home.

In effect, that means if you’re a property owner anywhere in the country you’ll almost certainly have to pay for your own care.

But what happens if you don’t have enough pension income or the investments to cover the cost of care?

Until now it has meant you would have to sell your property and use the proceeds to pay your care fees. A study by the University of Kent suggests at least 50,000 people a year are forced down this road, making an emotional time even more painful.

What if you didn’t have to? What if there was a way you could fund your care fees and hand down your beloved family home to the next generation?

At Shaw Insurance, we believe we found a way to help alleviate the long-term care funding crisis in this country.

The Care Property Bond is the first product of its type and could save people a lot of unnecessary heartache at what is already an emotional time.

It has been developed for people who need an urgent and often expensive level of care for which funding is unavailable from the NHS or local council.

Quite simply, it pays a tax-free monthly sum to help bridge the gap between the applicant’s pension and their care home fees.

To do this, the property is swapped for a Care Property Bond. After that, a loan is secured against the home and it is let out to tenants.

Crucially, the amount of equity taken out is capped, and with the rent received being used to meet the interest on the loan and any other outgoings concerning the property, this means the debt does not grow, unlike with other retirement options, such as expensive equity release.   

On top of that, the applicant has peace of mind that the income payments from the Care Property Bond will continue for the rest of their life.

Probably most important of all, the applicant knows their loved ones will inherit the net equity in the property when they die. And if they decide to continue letting out the property until the loan is repaid, they will inherit the property debt-free.

However, while we believe the Care Property Bond will help many people at what is a difficult time, we understand taking out a financial product of such magnitude is a big decision.

That is why we insist applicants are first assessed by specialist adviser My Care My Home, which will determine what level of care is needed. After that, applicants must seek advice from a financial adviser to see if the Care Property Bond is the best option for them.

At Shaw Insurance, we realise it may take another generation to completely solve the care crisis in this country.

But we believe the Care Property Bond will help many people live out their final years with as much peace of mind as possible. To us, that is priceless.

‘This is a ​Care Property Bond Paid Post. The news and editorial staff of the Financial Times had no role in its preparation’