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Planning for Long-term Care - UK - September 2017

“Long-term care is not something most expect to need or will indeed require, making it a difficult thing for plan for. Despite the current lack of products that help people to plan and pay for long-term care, Mintel’s research suggests a reasonable level of support for the idea of insurance policies to help meet these costs. However, more also needs be done around increasing awareness of the issue and encouraging more people to speak to family and professional advisers about their responsibilities and options for funding care.”
– Jessica Galletley, Financial Services Analyst

This Report looks at the following areas:

  • Taboo around care means people don’t plan for it
  • Releasing equity in property is key to funding care
  • Care conversations should become part of a wider financial review

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Table of contents

  1. Overview

    • What you need to know
      • Report definition
      • Executive Summary

          • The market
            • Ageing population will see demand for care rise
              • Figure 1: Life expectancy at birth, UK, 1980-82 to 2013-15
            • Health improvements has seen demand for care fall among under-85s groups
              • Figure 2: Number of people who cannot complete Activities of Daily Living (ADLs) and Instrumental activities of daily living (IADLs), 2011-15
            • Proposed changes to asset thresholds
              • Most over-65s own their home outright
                • Figure 3: Consumers housing situation, June 2017
              • Companies and brands
                • Two providers dominate long-term care annuity market
                  • Whole-of-life as a starting point for covering care costs
                    • Advice on funding long-term care is hard to find
                      • The consumer
                        • Majority have given no thought to long-term care
                          • Figure 4: Considerations given to long-term care funding, June 2017
                        • People most likely to expect to use savings to cover costs
                          • Figure 5: Funding plans for long-term care, June 2017
                        • People have a good understanding of their requirement to fund care…
                          • Figure 6: Awareness of funding responsibilities for long-term care, June 2017
                        • Half think people should pay for at least some of their care costs
                          • Figure 7: Awareness of funding responsibilities for long-term care, June 2017
                        • Not expecting to need care could put people off planning for it
                          • Figure 8: Attitudes towards receiving long-term care in the future, June 2017
                        • Two in three interested in care insurance for elderly family members
                          • Figure 9: Attitudes towards caring for elderly family members, June 2017
                        • What we think
                        • Issues and Insights

                          • Taboo around care means people don’t plan for it
                            • The facts
                              • The implications
                                • Releasing equity in property is key to funding care
                                  • The facts
                                    • The implications
                                      • Care conversations should become part of a wider financial review
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • Ageing population will see demand for care rise
                                              • Health improvements has seen demand for care fall among under-85s groups
                                                • Proposed changes to asset thresholds
                                                  • Most over-65s own their home outright
                                                  • Market Drivers

                                                    • Increase in life expectancy means more people will need care for longer
                                                        • Figure 10: Life expectancy at birth, UK, 1980-82 to 2013-15
                                                      • Population of over-85s set to double
                                                        • Figure 11: Population forecasts, by age, 2017-39
                                                      • Number of people unable to complete ADLs falls
                                                        • Figure 12: Number of people who cannot complete Activities of Daily Living (ADLs) and Instrumental activities of daily living (IADLs), 2011-15
                                                      • People not getting the care they need
                                                        • Over half a million of over-65s receiving long-term care
                                                          • Figure 13: Number of over-65s receiving long-term care, 2015/16
                                                        • Cost of care set to rise
                                                        • Regulatory and Legislative Context

                                                          • Proposed changes to asset thresholds
                                                            • 2014 Care Act/Dilnot Commission proposals
                                                              • Conservative manifesto hints at further changes
                                                                • Figure 14: Asset thresholds for long-term care means test
                                                              • Care arranged by council for an administration fee
                                                                • Changes make it difficult to plan
                                                                  • Deprivation of assets
                                                                    • New pension rules give people greater access to their funds
                                                                    • Consumers’ Financial Preparedness

                                                                      • Most over-65s own their home outright
                                                                          • Figure 15: Consumers housing situation, June 2017
                                                                        • Pension wealth highlights importance of flexibility
                                                                            • Figure 16: Individual personal pension wealth and formal financial assets - weighted, by age band, July 2012 – June 2014
                                                                        • Products Used for Paying for Long-term Care

                                                                          • Preparing your finances
                                                                            • Deferred payment schemes
                                                                              • Inheritance tax planning can limit care costs
                                                                                • Long-term care annuities
                                                                                    • Figure 17: Annual sales of long-term care insurance, 2006-16
                                                                                  • Equity release schemes allow people to unlock funds
                                                                                  • Companies and Brands – What You Need to Know

                                                                                    • Two providers dominate the long-term care annuity market
                                                                                      • Whole-of-life as a starting point for covering care costs
                                                                                        • Advice on funding long-term care is hard to find
                                                                                        • Competitive Strategies

                                                                                          • Two providers dominate long-term care annuity market
                                                                                            • Just
                                                                                              • Friends Life
                                                                                                • Using whole-of-life as a starting point
                                                                                                  • Old Mutual Wealth
                                                                                                    • Vitality
                                                                                                      • AIG Life
                                                                                                        • Advice on funding long-term care is hard to find
                                                                                                          • Saga Care
                                                                                                            • Bupa
                                                                                                              • Family Building Society
                                                                                                              • The Consumer – What You Need to Know

                                                                                                                • Majority have given no thought to long-term care
                                                                                                                  • People most likely to expect to use savings to cover costs
                                                                                                                    • Half think people should pay for at least some of their care costs
                                                                                                                      • Not expecting to need care could put people off planning for it
                                                                                                                        • Two in three interested in care insurance for elderly family members
                                                                                                                        • Experiences of Care

                                                                                                                          • Nearly a quarter have family currently receiving care
                                                                                                                            • Figure 18: Family members’ care status, June 2017
                                                                                                                          • Younger generations more likely to have family in residential care
                                                                                                                            • Figure 19: Family members’ care status, June 2017
                                                                                                                        • Considerations Given to Long-term Care Funding

                                                                                                                          • One in ten knows how they would pay for care
                                                                                                                              • Figure 20: Considerations given to long-term care funding, June 2017
                                                                                                                            • Consideration rises among over-65s…
                                                                                                                              • …but even in this age group most don’t have a plan
                                                                                                                                • Figure 21: Considerations given to long-term care funding, by age, June 2017
                                                                                                                            • Paying for Long-term Care

                                                                                                                              • Half plan to use personal savings
                                                                                                                                • Selling more popular than equity release for accessing property wealth…
                                                                                                                                  • Figure 22: Funding plans for long-term care, June 2017
                                                                                                                                • …but ideas change as people get older
                                                                                                                                  • Low expectation for insurance plans among over-65s
                                                                                                                                    • Figure 23: Funding plans for long-term care, by age, June 2017
                                                                                                                                  • Most use two or more fund sources
                                                                                                                                    • Figure 24: Repertoire of funding plans for long-term care, by sources of long-term care cost cover, June 2017
                                                                                                                                • Awareness of Funding Responsibilities

                                                                                                                                  • People have a good understanding of their requirement to fund care…
                                                                                                                                    • Figure 25: Awareness of funding responsibilities for long-term care, June 2017
                                                                                                                                  • …although don’t really understand the role of local authorities
                                                                                                                                    • Increasing awareness of asset limits could incentivise people to plan
                                                                                                                                      • Figure 26: Awareness of funding responsibilities for long-term care, by age, June 2017
                                                                                                                                    • Over a third say they have an idea of care costs
                                                                                                                                      • Figure 27: Agreement with the statement ‘I have an idea of how much long-term care costs’, by considerations given to long-term care, June 2017
                                                                                                                                  • Attitudes towards Funding Long-term Care

                                                                                                                                    • Over half agree that people should cover their own costs
                                                                                                                                      • …although protection for homes is key
                                                                                                                                          • Figure 28: Awareness of funding responsibilities for long-term care, June 2017
                                                                                                                                        • Younger people more interested in receiving advice
                                                                                                                                          • Pension planning presents an opportunity for care funding discussions
                                                                                                                                            • Quality of care concerns could drive people to become self-sufficient
                                                                                                                                            • Attitudes towards Receiving Long-term Care

                                                                                                                                              • Making it easier for people to talk about care
                                                                                                                                                  • Figure 29: Attitudes towards receiving long-term care in the future, June 2017
                                                                                                                                                • Two in five don’t expect to need long-term care
                                                                                                                                                  • Those who have thought about care are wary about becoming a burden
                                                                                                                                                    • Figure 30: Attitudes towards receiving long-term care in the future, by considerations given to long-term care funding, June 2017
                                                                                                                                                  • Women more concerned about being a burden
                                                                                                                                                    • Figure 31: Attitudes towards receiving long-term care in the future, June 2017
                                                                                                                                                • Attitudes towards Caring for Elderly Family

                                                                                                                                                  • Two in three interested in care insurance for elderly family members
                                                                                                                                                    • Figure 32: Attitudes towards caring for elderly family members, June 2017
                                                                                                                                                  • Making care-related decisions for family is difficult
                                                                                                                                                    • Figure 33: Attitudes towards caring for elderly family members, June 2017
                                                                                                                                                  • Younger generations will have a greater role to play
                                                                                                                                                    • People with relatives in care more aware of its financial and lifestyle impact
                                                                                                                                                        • Figure 34: Attitudes towards caring for elderly family members – all saying ‘agree’, by experiences of caring for family members, June 2017
                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                        • Abbreviations
                                                                                                                                                          • Consumer research methodology

                                                                                                                                                          Companies Covered

                                                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                                                          Planning for Long-term Care - UK - September 2017

                                                                                                                                                          US $2,672.70 (Excl.Tax)