Funding uncertainty
Research conducted by AIG Life asked people how they would cover the cost of care for themselves or their parents, should they need it.
25 per cent said they would have to sell their home, while another 17 per cent said they would have to sell assets they had intended to pass on as inheritance.
A further 16 per cent said they would need their children to help pay, or that they would have to pay for their parents. Just 11 per cent said they had enough in savings to cover the cost.
“Four out of 10 also said they would rely on the state or simply didn’t know how they would pay for it,” adds Nicki Plews, propositions manager at AIG Life.
“That’s a lot of uncertainty at a time when care is a rising cost on the state and the UK government thinks it is something we need to talk about.”
What funding solutions will be proposed as part of the much awaited – and frequently delayed – social care Green Paper (now due this April) remain to be seen.
Against this backdrop, informal care for the elderly is on the rise and, with it, an ever-increasing number of people providing care for both elderly relatives and children: the so-called sandwich generation.
Half the UK’s 6.5m carers are juggling paid work alongside caring, according to a report by Carers UK and Employers for Carers published in March 2014. The charities also found that one in six carers leaves work or reduces their hours to care.
Plan early
In short, advisers have a duty to point out the reality of the situation in today’s environment, says Wayne Carter, head of sales and marketing at National Friendly.
It is also important to consider with clients the impact on other members of their family in the event of a claim.
“This aspect is often overlooked,” he adds. “Assumptions are often made by clients that other family members will make sacrifices without having direct conversations with them.”
Paul Yates, product strategy director at iPipeline, adds: “While it’s great that we can expect to have over two decades of rest, those approaching and entering retirement are not necessarily financially prepared. They have less assets, carry greater debt and incur more expenses – especially with regard to care home costs.
“Many are just not able to retire at age 60 to 65. The rise of retirement interest-only mortgages is a massive indicator of additional funds required at this stage in life.
