What you need to know about later life protection

  • Identify why the cost of care in the UK is rising and what that means for protection needs.
  • List how advisers can help clients plan early and identify the right protection cover.
  • Describe which products have entered the market to meet later life protection needs.
What you need to know about later life protection

We are mostly living longer but not necessarily in better health. 

And many people will latch onto the positives and dismiss the negatives in that message, preferring a 'head in the sand' approach.

But the hard facts cannot be ignored. They are enough to stop anyone in their tracks.

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Unpalatable it might be, but advisers have a duty to make clients aware of the issues, the implications – for individuals, their families and society – along with the later life protection options that might be available.

“In the 1950s there was little difference between life expectancy and the ages at which people finished working – particularly for men,” says Sarah Crofts, Office for National Statistics Centre for Ageing and Demography, in its release from December 2018, Living longer: fitting it all in – working, caring and health in later life.

“Now, on average, men can expect to live around 15 years and women can expect to live around 20 years after they stop working.”

Those aged 50 to 64 now outnumber those aged 25 to 34. The number of active 16 to 17-year-olds has nearly halved. The number of active 65s and over has more than doubled, according to a summary of labour market statistics published by the ONS in April 2018.

The extra years of life can come at a heavy price. 

In a study conducted by researchers at Newcastle University’s Institute for Ageing, it found the number of older people diagnosed with four or more diseases will increase in the next 20 years, between 2015 and 2035. The study referred to this as "multi-morbidity”.

Cost of care

It is fairly grim reading. And it does not get any better when you consider the cost of care.

Although it can vary hugely, costs average around £600 a week (£31,200 per annum) for a care home place and over £800 a week (£41,600 per annum) for a place in a nursing home, according to Age UK. 

Those in England with assets and savings of £23,250 plus, including the value of their home unless their partner or another dependant lives there, will not receive any local authority funding if moving into a care home, as set out by the Money Advice Service on its website.

The thresholds are £26,500 in Scotland and £30,000 in Wales. Although the thresholds remain the same for the ‘care at home’ means test, the value of the individual’s home would not be taken into account in this instance.

It is important to bear in mind that if the individual receives any protection payout, it is likely this will be included in total assets and savings for means testing purposes. 

Considering the low means testing threshold though, this fact arguably should not preclude protection. The financial unpreparedness of most throws further weight behind this.