Training is available to IFAs who want to specialise in LTCI, writes Paul Casey
For many IFAs, long term care insurance (LTCI) presents a difficult sale. The product and market are more complex than many others, as are its interaction with State benefits and the taxation system.
There is also the customer's perception of the need for LTCI and how they prioritise it with other financial needs. Many fail to recognise the importance of making adequate pension provision, so getting them to look beyond the date of retirement is often a challenge. This is shown in the current breakdown of product types on the LTCI market ' with immediate care contracts representing the biggest product grouping and pre-funded contracts actually shrinking.
But there are those who not only excel at understanding the market but are also dedicated to its growth ' the specialist IFA. Advisers tend to be split between the generalist and the specialist, with the latter tending to concentrate on one or two, often related, product lines. Good examples are found in abundance in the PMI market, but less so in LTCI. Yet they do exist. IFAs already refer customers on to such specialists where they may receive the most appropriate advice for their particular needs and circumstance. The wider use of specialists should therefore be encouraged.
IFAs that want to specialise in the LTCI market can also become members of IFACare, a not-for-profit organisation dedicated to the regulation, education and training of IFAs doing LTCI business. Apart from training materials, IFACare runs a series of training courses and seminars to keep the specialist up to speed.
There are some consumer safeguards already in place in the market. For people looking to use their homes for LTCI provision, using a Safe Home Income Plans (SHIP) registered company will provide protection.
SHIP, a voluntary self-regulating body, was established in the early 1990s, with the aim of protecting consumers following the very public collapse of a few providers in the 1980s, which left them without a home or cover. SHIP members have a code of conduct to which they must abide to remain members.
Providers have also started to select IFAs through which they are prepared to offer certain LTCI products.
Selection is based on the expertise of the IFA and this is a practice that is likely to grow within this complex market as providers attempt to grow the market while distancing themselves from poor advice.
It seems that if IFAs wish to make LTCI a key part of their product advice offering, they will need not just to do their homework ' but prove they have done so.
LTCI is due to fall within a regulated environment in 2004, along with critical illness and income protection insurance. Until then, it seems that the consumer will have to rely on a mixture of self-regulation and a specialist adviser.
