Changes to nursing home care fees prompt significant increase in LTC sales
Norwich Union has noted a significant increase in long term care (LTC) business since the changes in nursing home care fees were introduced in September last year.
Sandy Johnstone, LTC strategy manager at Norwich Union said that, from an initial assessment, for the end of the year, fourth quarter proposal activity surged by a third compared with the rest of the year.
'Pre-funded planning is split into two sectors: LTC bonds and standalone products. During the last quarter of 2001, we saw a significant increase in business, and proposal activity in this sector was up by a third during the last quarter, which is very encouraging.
'This suggests that the periods of uncertainty in the earlier months of 2001 were because IFAs and their customers were not entirely sure about how free nursing care would end up,' he said.
Johnstone also said that immediate care products is another area to have shown strong growth during 2001 with growth increasing by 50% .
Chris Ellicott, technical manager at Age Concern Financial Partnerships, is hoping that LTC business will increase further this year, following the growth over the last year.
He said: 'Since September when the rules on free nursing care changed, there has been a significant increase in LTC business. People were hoping that the Government would pay for more, and they now realise that this is not going to happen. We are hoping to see LTC business increase further this year.'
Roger Edwards, head of products at Scottish Life, believes that the Government proposals on LTC last year clarified the rules, which made it easier for IFAs to recommend products to their clients. He said that before the proposals, IFAs did not understand the rules and therefore could not give proper advice. However, he believes the surge in LTC business has been significant but not terribly so. He said: 'The sort of increase recorded by Norwich Union is impressive. But you have to remember that LTC is starting from a small base, so the increase is commendable but not huge.'
Johnstone not only accredits the increase in growth to the Government's decision to implement changes to care funding, but also believes that awareness of LTC as an invaluable product is increasing among IFAs. 'IFAs are realising that LTC is a central area of advice and not on the edge of the menu,' he said.
Edwards added: 'Now the care fee rules are in force, it is easier for IFAs and product providers to pass on the message and educate the public. The main problem with LTC is that the goal posts are continually being moved. I can understand why IFAs don't promote the product as things keep happening in the background.'
