Leaving aside the politics, can private insurance help to solve the problem of looking after the elderly? Jason Hurley puts the case.
All of these are critical to future success, and some of the existing initiatives can be improved. While the role, scope and success of the Money Advice Service is unclear at times, this is the type of initiative that may assist people to improve their understanding of their needs, their options, and the implications of their choices. Pension reform has been delayed a little longer, but surely some clarity is on the horizon.
So what is a ‘long-term care annuity’? The basic product is being akin to the ‘Oasis’ product, launched by Lincoln National in the early 1990s. The pension annuity starts at a lower level (roughly 10%) and then increases (typically doubling) if the customer needs care at a later date, and there is encouragement that clarity will be offered on the tax treatment of these products. They offer a way for people to use their tax advantaged pension contributions to purchase LTC benefits and will certainly re-emerge.
By ‘annuity plus’ we are referring to products seen in other markets where there are additional payments made for other health problems, for example, modest lump sums for critical illnesses, or hospital cash-type benefits. There could be a market for these products, and we should all look forward to the regulatory clarity that we need to develop products and solutions.
So, in conclusion: International examples show that solutions will emerge when a stable framework exists. Around the world, there are a wide range of products that cover long-term needs: some are sold on a group basis, some where children pay the premium for their parents and some where the care benefit is sold in combination with life insurance and other health benefits.
In summary, there are many innovative routes to tackling this problem. Insurers and reinsurers are ready, willing and keen to address these issues. Before doing so, we need some ‘help’ from the government, and its revenue and regulatory arms. In return, the insurance industry must do its bit, offering fairly priced, high-quality products, with strong TCF values and sold in a professional way.
Jason Hurley is head of sales and marketing at RGA
