Gone for Good? Pre-funded insurance for long-term care

Gone for Good Pre funded insurance for long term care

What role could a market in pre-funded insurance could play in funding long-term care, and would such products could help policymakers achieve their objectives for the social care system?

In the long-running debate on how to fund long-term care in England and Wales, various stakeholders have consistently advocated a central role for financial services, and prefunded consumer insurance in particular.

This report examines this approach by providing answers to two questions:

  • What potential role could pre-funded insurance take in funding long-term care?
  • To what extent can the pre-funded long-term care insurance market help policymakers achieve key strategic policy objectives for social care?

The report examines the demand and supply-side barriers to the use of pre-funded long-term care insurance, that have seen all providers exit the market in the UK as of 2010.

The report argues that even if the UK were in the future to achieve a level of take-up of 15% for pre-funded care insurance – equivalent to France (which has the highest take-up in the world) – this would still result in outcomes that failed to meet many policy objectives for long-term care funding, particularly associated with ‘catastrophic costs’, fiscal pressures and the incidence of means-testing.

The report concludes by outlining some of the multiple other roles that the financial services industry could take in funding social care, particularly around delivering and servicing a state-sponsored insurance scheme for long-term care, akin to the schemes found in countries such as Singapore and the Netherlands.

This report has been published as part of the Care Funding Futures work programme run by the Strategic Society Centre. The Care Funding Futures work programme has been made possible by the support of Bupa, PwC, Age UK and Tunstall.

Author: James Lloyd, Strategic Society Centre

Download the report: Gone for Good – Pre-funded insurance for long-term care

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