The introduction of new Government funding to help elderly people pay for nursing home costs will ha...
The introduction of new Government funding to help elderly people pay for nursing home costs will have little affect on long term care insurance (LTCI) sales, according to industry experts.
From 1 October, people who need nursing care in England will be put into one of three bands ' depending on their need ' entitling them to £110, £70 or £35 a week from the NHS. But with the cost of care running into thousands of pounds a year, it is forecast that insurance will continue to have a vital role to play in meeting fees.
Sandy Johnstone, retirement and protection strategy manager at Norwich Union, said national fluctuations in nursing home fees will still make insurance essential in some parts of the country.
'The irony is that there is a national amount provided by the Government even though the cost of nursing homes varies throughout the country. Annual fees can vary from £18,000 in the north to £26,000 in the south east. In the north £110 a week would cover a much bigger proportion than in the home counties. Wherever you live, however, the contribution will not go near the full cost, so insurance will be just as important.'
Bob Lewis, chairman of lobby group the Continuing Care Conference, agreed, saying the insurance market could be set for further growth, despite the extra funding.
'The need for insurance will only marginally reduce in England. The fees that have to be met will still be considerable. In most cases, 90% of care costs will still have to be met by patients. The market for financial solutions ' in the form of equity release or insurance ' will in turn have to grow,' he said.
With clarity about State funding finally achieved, Johnstone added the need for sound advice to explain cover levels on an individual basis will be heightened. 'Advisers will need to ensure customers take into account the amounts they will be entitled to from the State when calculating cover levels.'
l Local authorities will continue to take responsibility for nursing care funding in England until April 2003, when the NHS will take over. This has been delayed from the previous cross-over date of April 2002.
