Scottish Widows has denounced the taxation of long term care products and called for them to be made tax-deductible to increase affordability.
In its submission to the Royal Commission, the company says long term care insurance is fundamental to spreading the burden of care costs more evenly.
Heathcare marketing manager George Andrew said the Royal Commission “has a clear opportunity to introduce a more positive framework for the provision of long term care to the elderly”.
Scottish Widows, which launched its first long term care insurance product, the Care Plan, in 1997, believes the Government needs to take the initiative to encourage people to plan ahead and pre-fund their care requirements.
The insurer suggests this could be achieved by implementing a number of strategies:
The provision of basic information on state benefits, care providers with * ratings and the financial options available to consumers via a publicly funded but privately run National Care Line
New local community support mechanisms for “low intensity” care
The introduction of incentives to allow tax-free cash sums at retirement to be used tax-efficiently to pre-fund care and to allow annuity payments to be structured so they increase as people become less able to undertake various ADLs
“With its emphasis on changes to the tax system and the close relationship between retirement planning and long term care, we are certain that the kind of framework we are recommending to the Royal Commission would yield substantially more choice for consumers,” said Andrew.
Scottish Widows’ call for the abolition of tax on long term care has not been echoed across the industry. Paul Bennett, advertising and PR manager at PPP lifetime care, commented: “Our plans are structured so the benefits paid are tax free and we are very happy with that position.”
Scottish Widows is re-launching its critical illness product, details to be announced next month.