Proposals for the state to meet more residential care costs so that the elderly do not have to sell their homes may inadvertently lulled self-payers into a false sense of security, says a specialist annuity provider.(1)

Chris Horlick, Managing Director of Care at Partnership says there is a significant danger of this from the Dilnot’s proposals. “Self-payers are those who have assets, including property, exceeding £23,250 in England. This threshold will rise to £100,000 if Dilnot’s proposals are accepted. But the changes will not be implemented until 2013 at the earliest. (1)

The Dilnot Commission on Funding of Care and Support published its findings and recommendations to government on July this year.

Horlick added: “Many may believe that the Government will pick up all their care costs once they have paid the first £35,000 of their social care costs. However this is simply not thecase! The Government will only meet social care costs and not hotel costs and general living costs.” (1)

Partnership estimates that even if Dilnot’s proposals are implemented in full, a typical policyholder in a quality care home will have to meet 90% of the costs they already pay. (1)

One of the ways to meet these costs is to buy an Immediate Needs Annuity (INA) which guarantees an income for life to meet long terms care costs in return for a one off premium.

Research commissioned by Partnership and undertaken by Professor Julien Forder of the University of Kent and London School of Economics, found that 40 per cent of all self-payers could potentially afford and benefit from an INA. (2)

Professor Forder said: “Research on the net benefit and affordability of Immediate Needs Annuities suggests that around 45,000 self-funders in England would both benefit from them (making the usual assumption that people buy insurance for peace of mind) and be able to afford them. These 45,000 potential beneficiaries are largely those people that are living alone with high levels of wealth (especially housing wealth).” (2)

Sources:

(1) Partnership press release, 1 August 2011

http://www.partnership.co.uk/press/2011/August/Government-must-act-on-Di...

(2) Partnership press release, 28 March 2011

http://www.partnership.co.uk/press/2011/March/Immediate-Needs-Annuities-in-