Planning for long-term care

Long-term care is still one of the great unknowns of growing old. Advisers and clients must address the potential need to meet long-term care costs, and then come up with a plan..

We need to sit down and decide what this plan is. This can be difficult at times when technology is a consistent game changer.

Changing the landscape

Not too long ago, long-term care consisted of the nursing home where our grandparents spent their final days. However, the concept of long-term care has changed dramatically with facilities that house sophisticated medical equipment and specialised frail care. This is because, as with many other modernised concepts, the changing needs of individuals constantly push the boundaries to achieve excellence.

The longevity factor

More interestingly though are the factors responsible for the changing long-term care needs of individuals.

Statistics are always a good starting point when one is looking to identify trends that fuel change, and one aspect that keeps on featuring in the space of ageing is longevity.
In fact, during the fifteenth century, the estimated average life expectancy was 20 years. During the 1800s this increased to an average age of 37. Throughout the twenty-first century, this improved dramatically to an average age of 80 years.

Hence, longevity has a major impact on the way risk benefits, with specific reference to critical illness benefits, are designed to provide sufficient and flexible access to funds linked to long-term care.

Medical life support

Besides statistics clearly indicating that people are living longer because of numerous reasons, one must also consider the fact that pioneering medical advances also keep people alive much longer than a few decades ago. This again impacts the way in which critical illness benefits are designed.

For example, in developed countries like the UK, women who are diagnosed with breast cancer now have a 78% chance of surviving at least a decade compared to only 40% some 40 years ago.

Also, diseases like Alzheimer’s has increased significantly on a global scale with the Alzheimer’s Association estimating that more than 115 million people will suffer from the disease by 2050. A team from the Bournemouth University compared health data from 21 western countries between 1989 and 2010 and found that there was a trend of dementia starting at a much earlier age.

The insurance savior

This is where aspects like early pay-outs come into play when advisers and clients consider critical illness benefits.

It has become a non-negotiable for critical illness benefits to make provision for early pay-outs in line with early detection trends and to offer clients unsurpassed breadth of cover. While most insurers will pay out for the majority of diseases, only one insurer offer clients a guarantee to cover all critical illness conditions that are covered by other local insurers.

In addition, financial advisers and clients must choose benefits that will enable clients to maintain their quality of life without having to worry about outliving their capital. In this space, insurers are increasingly improving their longevity options.

Valuable cover

Should clients survive a qualifying critical illness, certain longevity benefits enables them to receive additional pay-outs (on top of their critical illness benefit) for the rest of their life, which means their critical illness cover will simply never run out.

Also, in cases where clients become disabled and unable to work, they can receive up to 50% extra disability pay-outs. Then, at age 80, if clients never claimed before, one insurer will pay-out a significant lump sum that can supplement their retirement income in the long run.

This clearly demonstrates that insurers are constantly thinking about the future and how benefits can cater for the future needs of clients; whether this consists of having sufficient funds for long-term care, or having access to the most progressive medical treatments.