It costs around 30 per cent of the whole of life premium to add lifestyle care cover and, for an additional monthly premium, customers can protect the death benefit in the event of a claim for care cover.
Deepak Jobanputra, deputy chief executive officer at Vitality Life, says demand has been reasonable for a product that is not mainstream. “People do worry about these types of conditions and how it would affect their independence. If someone needs the money for care it does not make sense to make them wait until death for a payout,” Mr Jobanputra explains.
Another insurer to add care cover to its whole of life insurance is AIG. This pays 75 per cent of the sum assured upon diagnosis of a medical condition that causes severe cognitive impairment or means the policyholder can no longer live independently. The maximum sum insured is £400,000, giving a maximum care cover benefit of £300,000 and, once a claim for care is paid, the policy ends.
Adviser frustration
Even though these two options mean some people will benefit, the fact there is nothing for clients who want to plan for future care costs frustrates Peter Wright, director and adviser at Plan Money.
Four years ago, with the government looking to introduce Dilnot’s recommendations, he joined the Society of Later Life Advisers to be ready for the growth in this market.
“Nothing has changed; it is still like a ghost town,” he says. “I have spoken to insurers and reinsurers and, although there are plenty of ideas and product solutions, they cannot do anything until the government puts a framework in place. When this happens, financial services will be a major part of the solution.”
Developing a set of proposals that ensures care is delivered and funded as efficiently as possible is a must for the government. And, with the protection industry keen to be part of this market, it must ensure it facilitates the creation of insurance products to support those concerned about future care costs.
