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Long-term care: are you paying for it twice?

Thousands of pre-funded care fees plans are going unclaimed, meaning that people may be paying twice for their care.


by Michelle McGagh on Jan 30, 2013 at 12:20

Long-term care: are you paying for it twice?

A group of financial advisers is trying to help the families of older people with pre-funded long-term care plans to track down forgotten policies, amid concerns that some individuals could be paying for care fees twice.

Symponia, a professional body for financial advisers that specialise in care fees planning, has called on life insurance companies that sold pre-funded care plans in the 1990s to help families of policyholders to track down policies that have been forgotten or are not known about.

Pre-funded care fees plans were purchased by individuals to pay for their long-term care needs and paid out when that person could no longer perform certain activities and was therefore eligible for care. The plans were paid for by a single lump-sum or monthly premiums and most were purchased by people in their 60s who were relatively healthy but wanted peace of mind that their care would be paid for in older age.

The plans were popular and companies like Bupa, Aviva, Scottish Widows and PPP Lifetime Care sold a total of 44,000 policies in the early ‘90s. Pre-funded care plans are no longer available and have been replaced by immediate needs annuities. For the cost of a lump sum or monthly premium the immediate needs annuity will pay out a guaranteed sum for the rest of a person’s life should they become incapacitated and need long-term care.

Symponia said the number of policies that are being unclaimed by individuals who are now in their 80s could be ‘significant’ because policyholders have failed to tell their families about the plan or have forgotten themselves.

This means that some individuals could be paying for care fees twice, firstly as premiums to the life company and secondly, to care homes or other organisations providing care.

Janet Davies, joint founder and managing director of Symponia, said: ‘Having written over 400 pre-funded policies during the ‘90s, I know the reasons why people took out these policies and it helps me to understand why it is so important to include a search for these potentially forgotten plans now.

She urged life offices to follow in the footsteps of insurance companies Partnership and Friends Life which have pledged to help people track down unclaimed policies.

‘We hope other providers will appreciate the seriousness of this situation so that together we can put a process in place so that every person applying for an immediate needs annuity has the opportunity and peace of mind to know that existing long-term care insurance policies are not only uncovered, but claimed on.’

2 comments so far. Why not have your say?

steven fieldfare

Jan 30, 2013 at 17:00

They're already paying twice for care - policy or not. Most in this category will be home owning savers and, therefore, self funders. While still at home, they are subsidising Council nominees in Care Homes through their Council Tax and, again , after entering care through higher charges than those paid by Councils for their nominees.

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Lyndon Edwards

Jan 30, 2013 at 17:55

I wouldn't bet on there being too many policies out there - I recommended applications several times in the 90's but the underwriting always took so long particularly with Aviva, that the clients had often gone off the idea before they were issued. This was usually on the basis that if it took so long to issue the contract, how long would it take for a claim to be paid.

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