Long-term care insurance
What is long-term care insurance?
Long-term care insurance provide a regular income to pay fees for a nursing home or for home care for customers who can no longer look after themselves, because of old age or long-term disability.
Long-term care insurance was usually sold face-to-face on an advised basis. The customer would discuss their needs with a financial advisor and may have been given brochures about the cover available.
The advisor will usually have:
- completed a fact find (a form to record information about the customer’s circumstances)
- given the customer some written recommendations in a “reasons why” letter
- provided a welcome pack with policy documents like the insurance schedule and policy wording
There are 2 types of long-term care insurance policy: immediate care plans and pre-funded care plans.
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If the customer needed care straight away and didn’t have cover in place, they could pay a lump sum to buy an annuity, which would then be used to make regular payments for their care. This is known as an immediate-care plan, and these policies were set up as investments.
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A pre-funded care plan is one where the customer pays premiums into a plan while they are still healthy, to help cover the cost of their nursing home or home care in the future. This is no longer sold.
The premiums for pre-funded care plans can be paid as a lump sum, annually or monthly. The premium and benefit levels are often reviewable.
As the policies are long-term plans, they don’t need to be annually renewed in the way motor or household policies are. But the amount of money being paid in may not continue to be enough to cover the benefits. So the policies are usually reviewed every 5 years to make sure the premiums are enough to maintain the cover.
If at the review the premiums aren’t enough, then:
- the premiums may need to be increased to keep the same level of cover
- the benefit level may need to go down
Types of complaint we see
Complaints about claims
Long-term care insurance usually only pays benefits if a customer can’t do a number of activities of daily living – like dressing and washing.
Customers may complain that they even though they have a disability, their claim will only be paid if the specific definitions in the policy are met.
We may also get complaints about delays in approving claims. Claims are usually only made when customers are elderly and in poor health. So any delay could cause a financial loss if care needs to be paid for while waiting for a claim decision.
Complaints about mis-selling
Most of the complaints we see are about the sales of these policies.
Customers may complain that:
- the activities of daily living weren’t explained
- they didn’t know the policy was reviewable because this wasn’t explained to them
- the cost of the premiums to maintain the cover has become unaffordable
- the cover is worthless due to reductions in benefits after a policy review
What we look at
As with every case, in reaching a decision about what’s fair and reasonable, we consider:
- the relevant law and regulations
- any regulator’s rules and guidance that applied at the time
- any industry codes of conduct in force at the time
- what we consider was good industry practice at the time
If there are disagreements about the facts, we’ll make our decision about what happened using evidence provided by you, the financial business and relevant third parties.
How to complain
If you have a complaint about long-term care insurance, talk to your insurer first. They need to have the chance to put things right. They have to give you their final response within 8 weeks for most types of complaint.
If you’re unhappy with their response, or if they don’t respond, let us know. We’ll check your complaint is something we can deal with, and if it is, we’ll investigate to understand what happened and what went wrong.
Find out more about how to complain.
Putting things right
If we think your insurer has made a mistake or treated you unfairly, we’ll tell them to put things right. This usually means that they need to put you back into the position you'd have been in if the problem hadn't happened.
We’ll also consider whether you’ve experienced any distress or inconvenience as a result of what the business did wrong and whether we think it’s appropriate to award compensation.
Case studies
A consumer finds she's not covered under the terms of her lifetime care policy
Insurance Life Assurance Medical Conditions
‘I thought I’d taken out a lifetime cover policy for my care, but then I found out that my benefit level had been reduced’
Insurance Whole of life assurance
Useful resources
When we’re looking at complaints about long-term care insurance, we’ll use the following resources to help us:
Information for financial businesses
If you’re a business looking for information to help you resolve complaints or want to find out more technical information, you can find more detail about complaints about long-term care insurance in the business section of our website.