9 February 1996

No time like present to make healthcare plans

By Philip Clarke

TRADITIONAL forms of healthcare cannot be relied upon and farmers should be making financial provision sooner rather than later.

Speaking at a recent farm finance conference at Harper Adams agricultural college, Shropshire, NFU Mutual sales manager Dave Robinson explained that the number of people receiving such care was increasing faster than the states ability to pay for it.

"Demographic trends show that between 1991 and 2041 the number of disabled people aged 60 years or more will increase by 67% to something approaching eight million," he said.

"In the past, this type of care has been provided in the home by the family, by voluntary organisations and in state institutions."

But this is set to change as the government has transfered financial responsibility for long-term care from central to local authorities with fixed budgets. Family networks have also broken down, due to greater job mobility, more working women and increasing marital break-up.

"Add to this, the fact that over 70,000 geriatric beds have been closed by government in the past 10 years and one begins to understand the size of the problem."

Mr Robinson put the annual cost of providing long-term care at anything from £15,000 to £30,000. As the state becomes less able to pay for it, so the responsibility will shift to the individual – as has been happening with pensions.

"As such, private funding of this care should concern all those who want to protect their savings, property and other assets," he said.

"But it is evident that the general public does not perceive a need for this type of insurance, still depending on the National Health Service, or believing that disability "will not happen to me", or expecting their children to take care of them."

Mr Robinson highlighted three mechanisms for making financial provision:

&#8226 Prefunded schemes, with premiums paid into a plan to secure benefits in the event of care costs rising.

&#8226 Immediate needs schemes, with a lump sum investment taken out at the time care is needed to generate an annual payment.

&#8226 An investment bond made in advance to generate an annual income when health care is needed.

With the last option, if one is fortunate enough to avoid the need for long-term care, the fund is still available for other purposes, said Mr Robinson.

"The government is under some pressure to find ways of encouraging more people to effect this type of cover. One way would be to allow tax relief on the premiums, or allow cover to be bought as part of a pension contract.

"But whatever it does, it is never too soon to address the question of retirement planning." &#42

Dave Robinson: Never too

soon to address the issue of financial independence.