British Money eyes ER insurance hybrid
The insurer wants to release a product covering both health and social care using funds from equity release and the insurer – equity release will fund the policy holder’s care but the insurer will cover some of the costs if it hits a target.
The intermediary wants to use a younger family member as a guarantor for the later life product rather than including standard features such as a no negative equity guarantee to keep the costs low for policy holders.
Alexander Burgess, director of British Money, said: “We are looking to help different generations with a family focused financial product rather than offering a standard equity release product, where interest rates range between 6% and 7% and the debt often doubling in 10 years.
“We believe that a family home should be kept within the family and lived in, with a better value guarantor mortgage.
“This should give younger family members a home, with a stake in society and older family members the peace of mind that they will be looked after in later life.”
The product is designed to be taken out with the prior knowledge of different members of the family, as the younger family members will also have their income protected for up to a year should they need to care for an elderly relative.
The insurer is currently in discussion with a large credit provider for the equity release part of the package, while it is also speaking with insurers and reinsurers to administer and bear the insurable risk.
British Money plans to provide accident, sickness and unemployment protection for the loan; with a carer benefit being covered under unemployment protection.
Burgess reckoned releasing the product after the general election is appropriate, as he said a future government may provide further benefits and clarity for long-term social care provision.