The cost of long-term care in the UK is set to soar by £7,000 for each individual by 2025, rising to £33,000 or a staggering £38 million overall.
For the 45% who have no idea of how they will fund long-term care, life insurance may help meet these costs. You can compare life insurance with Money Expert.
The increase in the life expectancy will cause the current £26,000 annual figure to rise by more than a third over the next 13 years.
The estimates by insurance firm LV= have caused anxiety amongst consumers, with 88% arguing that the government should set a £14,000 limit on how much people should pay towards long term care.
It was found that 17% of Brits predict they will need to fund long term care for an elderly relative, with 23% arguing that they will use their homes as collateral to meet these payments.
The Future of Long Term Care report also revealed that the number of those expected to need formal long term care will rise from 840,184 today to 1.1 million by 2025.
“The UK is facing an uncertain future on the funding of long term care,” said Vanessa Owen, LV= Head of Equity Release.
“Low interest rates and living costs continually on the up, coupled with social care budgets being cut, creates a worrying financial backdrop for many, especially those in retirement.
Currently those with assets worth over £23,250 are not eligible for government support, ruling this option out for many. LV= revealed that the average person over 55 has combined assets in the form of investments, savings, and property after mortgage of £32,500.
“It is a real concern for people who have the burden of long term care costs approaching, as currently they could be faced with an open ended bill which makes it difficult to plan effectively to meet these costs,” added Ms Owen.
While 7% of those surveyed plan to avoid paying for long-term care by caring for elderly relatives themselves, others are digging deep to meet the costs.
More than a fifth will draw on their savings, 19% will use their salary and 23% would turn to equity release or remortgaging, while 16% would use their pension income.
You can compare life insurance with Money Expert.