Equity Release  

Time for a new look at care home cover

Charlotte Beugge

Charlotte Beugge

Way back in the early 1990s when I was a child reporter I was sent to see a nice man who was launching long-term care insurance for, I think, Commercial Union. I do not remember much about the encounter although I expect as an arrogant youth when asked my opinion I probably said I thought no one would buy it because it was too depressing to think about being in a care home.

While that probably was not the reason long-term care cover was pulled, it certainly was not a great seller. In-depth research (that is, a quick search online) uncovers that 20 years ago, there were about 30,000 plans in force. Said research also shows a typical premium then of £35 a month for a 50-year-old wanting £1,000 a month of cover for future home fees.  

That probably goes some way to explaining why long-term care cover – called pre-funded care plans by the Association of British Insurers – is but a distant memory. These days, you could easily pay £1,000 a week for a care home. Premiums would have had to rise so much that policies would have been too expensive. 

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Care of the elderly – and the way it is paid for – has been quite an issue in this election campaign. Theresa May has already had to do a swerve (elegantly in leopard-print slingbacks, possibly) on the Tory manifesto pledge on funding of at-home care, bringing in a cap after understandable shrieks from middle England that they could lose all but £100,000 of their wealth paying for help with daily living if they become infirm.

This is an issue that is not going to go away. Our ageing population means more of us may need help with day-to-day living as we grow older. While there are some financial products that can help with care fees – equity release, for example – maybe insurers do need to look at long-term care insurance again. Surely the combined brains of the industry can come up with something more palatable (and affordable) than the 1990s version.

Now I am nearer nursing home than nursery age, I am more willing to give it sensible consideration. But I still think the thought of paying out for a policy covering care costs is depressing – that much has not changed over the past quarter century.

Expats need banks too

Pity the poor old expat: they have got hardly anywhere to save their cash. A few years ago, the Isle of Man and Channel Islands were home to many subsidiaries of UK and Irish banks offering savings accounts to those who did not have UK addresses, but wanted to keep their money in well-known UK or Irish high street names. There is now only a handful left.

Now Nationwide International is shutting up in the Isle of Man. So is Permanent Bank International, the Isle of Man-based subsidiary of the Irish bank. For an idea of how small this market is, look at the Moneyfacts website. Its current offshore account best buy table has a three-year bond from Standard Bank paying 0.05 per cent on £100,000. It is not so much a best buy as one of the few you can buy.