Ranking people in affordability terms for long term care (LTC) would open the market to insurers actuaries have been told.
Speaking at the Actuarial Profession Health and Care Conference yesterday, Professor Les Mayhew, of the faculty of Actuarial Science and Insurance at Cass Business School, said those needing LTC could be placed into wealth bands according to the number of years of care they could afford based on assets and income.
People would then receive a proportion of costs from the state based on which band they were placed in. They would then be able to use a variety of financial products to cover the cost gap.
Mayhew said: "Insurance has not been popular to date and one of the reasons is that people who can afford the premiums are probably close to being self funders anyway.
"But, in a system where premiums only reflect the gap between what the state will pay and the cost of care, top up insurance becomes more affordable as the state provision rises and so becomes a more sensible for poorer people."
Recommending the plan to the Dilnot commission into care funding, due to report on 4 July, Mayhew added that the market would need time to mature:
"It seems that given that many long term care products like bonds would need time to mature as a market that any funding in the short term is going to be through equity release and immediate needs annuities. But over time we should see a mixed economy of different products," he added.
