Protection providers and advisers have been urged to prepare clients for later life care as the role of individual responsibility in covering the funding is expected to increase.
According to research from VitalityLife, 40 per cent of Britons are expected to financially support their parents with later life illnesses and the onus on the individual is likely to increase.
Ron Wheatcroft, technical manager at Swiss Re, said fiscal pressures on both local and central government were now “so great” that responsibility to cover later life care would have to move even further towards the individual.
A long-awaited green paper on reform of the care funding system was initially due to be published last summer, but has since faced several delays. Most expect the paper to propose a move away from a state-funded system.
Mr Wheatcroft said there was “no single silver bullet solution” but he believed the protection sector would have an “important part to play” in preparing families and consumers for the large costs associated with later life care.
He thought one way to prepare clients for such costs would be for firms to provide protection-based care products as part of a wider discussion about long-term financial needs.
Johnny Timpson, protection specialist at Scottish Widows, said advisers needed to focus on how the role of “appropriate financial protection” could come into its own in terms of helping their clients deal with the costs or care as well as certain illnesses such as dementia.
Mr Timpson said: “Critical illness cover can provide a significant financial boost to families at a time of emotional and financial stress and additional support benefits, such as ‘Care’ provided by RedArc, also provide much needed emotional and practical support, and not just to the person suffering from the illness.”
According to the Alzheimer’s Society, one in 14 people over the age of 65 will be affected by dementia with the likelihood increasing with age.
Unlike other serious illnesses, where medical treatment is available under the NHS, those suffering with dementia and other typically later-life illnesses predominantly need help with basic daily needs, which is not provided by the state.
Any consumer with assets of more than £23,250 (including a home), is responsible for their own care costs, which the Alzheimer’s Society estimates to amount to more than £100,000.
Mr Timpson added: “While a financial protection conversation most commonly takes place around mortgages or other life events such as the birth of a child or marriage, it’s important not to forget the role it plays in your clients’ wider financial planning, including their retirement.”
Some providers have already innovated in this space with products such as Vitality’s dementia and frailty care cover.
The product is an add-on to the firm’s serious illness cover, which pays out a lump sum, capped at £100,000, to help with care costs if the policy holder suffers from conditions such as dementia, Alzheimer’s, Parkinson’s, a stroke or frailty.