Jennifer Gilchrist, protection specialist at Royal London responds to the Health and Social Care Committee launching an enquiry into the social care funding gap.
Royal London is calling on the government to introduce policy changes which would enable the creation of a new at-retirement product which would combine existing income drawdown arrangements with insurance against future care costs.
Following the introduction of pension freedoms, growing numbers of people go into retirement with a pot of money from which they draw an income through retirement. A care insurance could be bolted on to these income drawdown arrangements, either in the form of a regular premium or a one-off lump sum. To make these products more attractive, Royal London suggests:
- Favourable tax treatment on money taken out of income drawdown to pay for care insurance; if this money goes directly to an insurer and any payout from the policy goes straight to a care home, these withdrawals should be tax free;
- An overall cap on people’s lifetime care bills, so that insurers are not taking on an open-ended liability and can therefore offer more attractive premium levels;
This product could be branded as ‘inheritance insurance’, as it could ensure that those who faced large care costs in later life were no longer at risk of having to sell a family home to meet care bills.
More information can be found in our policy paper Is it time for the care pension?
For further information please contact:
Meera Khanna, Corporate PR Manager - Protection
- Email: Meera.Khanna@royallondon.com
- Tel: 02032 725129
- Mob: 079191 70502
About Royal London:
Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £139 billion, 8.6 million policies in force and 4,348 employees. Figures quoted are as at 30 June 2020.