As the spotlight focuses on long-term care, Greg Becker asks if the French can offer a funding solution apart from immediate needs annuities.
The French long-term care market is, by UK standards, vibrant as there is both state scheme and private provision. One office, AG2R, has a number of LTC products, one of which utilises a form of DLA. When the pensioner takes their annuity, they have the option to cut their pension by 10%.
This benefit is then doubled when or if the pensioner requires LTC. This avoids the need for the individual to have separate provision for their LTC needs, something that many people may be reluctant to think about.
Another version is where an individual savings product is taken out with the intention of building up a savings pot, while providing an annuity in the event of requiring LTC. Payments are triggered when three out of four activities of daily living are unable to be performed.
At the age of 85, if LTC payments are not being made, the policyholder has the choice of taking the investment proceeds and maintaining their LTC protection at the same level or using the proceeds to double the level of LTC protection.
There is also a group LTC market in France – AG2R again has a presence with a product that is targeted at companies with more than 500 employees. Premiums are paid while the employee is working but not in retirement, whereas entitlement to cover continues until death.
The final French example is another group LTC item. AXA is setting a great example by providing LTC cover for its employees there. Cover is not only provided for employees, but can be extended to their parents, and can also be provided to former employees. This is perhaps another example of how employee benefits are more highly developed across the Channel.
LTC has seen a number of false dawns in the UK, and it would be brave (or foolhardy) to forecast with any degree of confidence when we will see any government implement a coherent strategy. Without this certainty, it is difficult for providers to develop insurance solutions.
The challenge of providing a decent standard of care to the elderly is likely to increase, which is why as an industry we must continue to lobby for action.
Greg Becker is product development actuary at RGA
