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The Care Cap Postponement – An Opportunity?

Dementia Care – What You Need To Know Flexible Planning Strategies

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III Introduction The government’s decision to postpone the lifetime care cap was inevitable in a way, says editor Michael Wilson. But its absence opens up an attractive opportunity for advisers

July/August 2015

Intro Perhaps we shouldn’t be too surprised at the Government’s announcement on 8 July that it was postponing the introduction of the £72,000

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lifetime care cap provision until 2020

Dementia and Healthy Lifestyles What you need to know about helping your clients reduce their risk, and protect their finances should the worst happen and they suffer dementia

VIII LifestyleCare Cover What the new product from Vitality can do for your clients

XII Lasting Power of Attorney An LPA can change your life for the better, says Michael Wilson. But how many clients are even aware of its existence?

What will it cost the industry, and what can we do about it?

XVI Insurance on Investment Platforms Neil Martin talks to Deepak Jobanputra, Deputy Chief Executive Officer at VitalityLife, about the benefi ts of having a fl exible scheme – and the benefi ts for advisers, too

XIX The Changing Environment A graphical exposition of the ways in which care options are developing

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After all, a government that was trying to shave £12 billion off the welfare budget was never going to have that sort of room for magnanimity. It was just a little clumsy that the policy reversal should have come only two months after the General election in which it had formed a key plank of the Chancellor’s re-election strategy.

Originally scheduled for April 2016, there was always something a little improbable about the loud trumpeting about how older consumers shouldn’t have to fear selling their homes to pay for care in their old age - or, indeed, at any age where it might become necessary. So we’ve been more than a little disappointed by the four year setback – although our clients, who may have been relying on the timely arrival of the April 2016 safety net, are entitled to be feeling less happy with the situation. What’s more, although currently no cap applies, you start contributing towards care costs if you have more than £23,250 in assets and live in England.

health insurance products of every sort to a clientele that is feeling just a little more solvent than a couple of years ago. It’s an ill wind.

Health insurance, life and critical illness cover and single-premium care insurance propositions have been with us for a very long time, although the latter are rarely accessible to non-HNW clients. It will hardly be a surprise now if we begin to see innovative products emerging from the insurance providers that aim to bridge this affordability gap in one way or another.

The Vitality proposition includes a number of strikingly original ideas for keeping health and life cover flexible.

And the notion of linking life cover with proactive protection and fitness messages seems to us to be taking things to a new level. Take a look and see if you agree.

Mike Wilson Editor

But, negativity aside, where does all this leave us as financial advisers? With a renewed sense of purpose, possibly. With an opportunity to step up our holistic financial planning activities, certainly.

And with a focus for proposing

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Reducing Risks for Clients Dementia is on the increase. How can advisers help their clients to reduce their risk, protect their financial assets and improve their health prospects in the process?

First fact of concern: In 2012/13, more people visited NHS hospitals with dementia-related conditions than with any other agerelated condition. And around 800,000 people in the UK are currently living with some form of dementia – a number that the Alzheimer’s society says will go beyond a million by 2025.

Second fact of concern: Our increasing longevity is a wonderful thing in its own right, but we can scarcely deny that it’s one of the factors behind the increasing probability that deterioration of the mind will happen to more of us. In the longer term, it’s thought likely that as many as one in three of us will experience a medically significant degree of dementia at one stage or another.

Third fact of concern: Each individual with dementia is costing around £32,000 per year to treat and care for. But, alarmingly, only a third of this comes from the state. The rest usually needs to be found from friends and family – most usually, in the form of either cash support or time taken out by relatives acting as unpaid permanent carers. And that

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imposes a cost that goes much wider than the affected person themselves. The cost of care is felt through social isolation, lack of stimulus or work satisfaction, and loneliness. After all, the sufferer isn’t the person his or her family used to know.

A recent report from Dementia UK warned that with an ageing population, these costs will only increase in the future. And, as ought to be apparent, the postponement of the £72,000 Care Cap until 2020 – after which it may well be limited or postponed even further – has done nothing to reduce the anxiety that the prospects for a reduction of the financial stresses caused by dementia can be improved.

Furthermore, most people won’t benefit from the ap hen their other assets, such as property, are taken into consideration. ll of hich leaves financial advisers with both a problem and an opportunity. It’s fair to say that the public awareness of the dementia issue lags some way behind the reality – and that the right courses of action lie not ust ith financial measures such as insurance but also with legal matters such as the need to get wills,

powers of attorney and (where appropriate) property titles squared up and properly in place so that there can be no leaving things to chance.

But, as we’ll see shortly, there are plenty of other, more hands-on measures that an individual can take to help ward off the threat of dementia. The evidence is growing that mens sana in corpore sano is more than just a motto.

But First, What is Dementia Anyway?

Okay, let’s dispense with the idea that dementia is always a manifestation of old age. Early onset dementia, including Alzheimers, can appear at ages as young as 45. Circulation-related issues such as vascular dementia (essentially a long series of small but debilitating strokes) can turn up at almost any age and currently account for about 40% of dementia cases.

But, for the most part, we can agree that the majority of dementia sufferers will be past their 65th birthdays.

Which is inconvenient, since industry data shows that some 81% of all health

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There will be 1 million people with dementia in the UK by 2025.

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Two thirds of people with dementia are women.

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There are 40,000 younger people with dementia in the UK.

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The proportion of people with dementia doubles for every fiveyear age group.

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One in six people aged 80 and over have dementia.

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60,000 deaths a year are directly attributable to dementia.

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Delaying the onset of dementia by five years would reduce deaths directly attributable to dementia by 30,000 a year.

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The financial cost of dementia to the UK is £26 billion per annum.

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There are 670,000 carers of people with dementia in the UK.

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Family carers of people with dementia save the UK £11 billion a year.

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80 per cent of people living in care homes have a form of dementia or severe memory problems.

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Source: Alzheimers’ Society

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insurance currently relates to the under-65s. Not so very surprising on the one level, since that’s where the earning power stops and the household budget generally tightens – but it still leaves the industry with two problems.

Firstly, how can insurers keep their premiums affordable for the over-sixties in the face of a much higher probability of a dementia claim, and how can such policies be marketed? And secondly, can e devise flexible policies that can kick in if, and only if, the need seems likely to arise?

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Can We Fight Dementia?

So what practical steps can we take to help prevent or hold off dementia? And do they fall within the professional remit of a financial adviser?

Well, studies from the Fisher Centre for Alzheimer’s Research Foundation have shown that, even though Alzheimer’s itself is substantially caused by genetic factors, people who follo four out of five specified healthful behaviours are 60% less to develop Alzheimer’s and other forms of dementia in old age than those who follow none of these healthy lifestyle measures.

No surprises - the measures include exercising regularly, not smoking, keeping their weight down, eating healthily and moderating alcohol intake.

And the prospects of success are significantly higher hen it comes to vascular dementia, which as we’ve seen accounts for t o fifths of all dementia cases.

A more recent study by the University of Eastern Finland also revealed that a healthy lifestyle can preserve the brainpower of those at risk of dementia. The study found that those who received a programme of guidance on healthy eating, exercise, brain training and the management of risk factors such as high blood pressure had 25% higher brain function than those who didn’t receive the programme.

More research from the American Alzheimer’s Research & Prevention Foundation has suggested that physical exercise alone reduces your risk of developing Alzheimer’s disease by 50%. And that taking on new mental challenges, such as learning a new language or developing multitasking activities requiring communication, interaction, and organisation are the most likely to offer protection.

You’ve got to use it or lose it.

It’s about time that a greater emphasis was placed on ensuring that clients and their

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families fully understand the benefits of health and ellbeing on their later life. Which is why advisers aiming at a holistic life-planning relationship with their clients ought to be at least considering the possibility of encouraging them to do more to fend off what is likely to prove to be a distressing and very expensive disablement.

Some, of course, will need a lot of convincing that their health is any of their financial advisers’ business. A few will mutter darkly about the nanny state. But if the suggestion comes tied to the prospect of a financial saving – or, at least, a meaningful reduction in their insurance costs – then we should be getting somewhere.

Vitality says it believes in the importance of making exercise habitual, which is why it encourages people to introduce physical activity into their existing routines. Using healthy behaviours and incentives to reward active behaviours, it says, can reduce the risk of developing age-related illnesses and/or delay their onset.

What’s New for Advisers?

The typical protection market has not kept pace with an ageing population, says Vitality. Instead, as we’ve seen, it continues to offer insurance that’s weighted to life before retirement - with 81% of protection in force up to age 65 (Swiss Re, 2014).

Up until this July, we were all assuming that the Care Cap would limit the potential financial do nside of care at £72,000 with effect from April 2016. That prospect alone would have been a fairly poor sort of safety net for many people who would probably have had to sell their property in order to meet their costs.

But the abrupt deferral of the care cap until 2020 – and who knows, perhaps beyond - has changed the game completely for clients who may have been building their expectations around

the arrival of the £72,000 safety net. As things stand, it leaves potentially unlimited costs for anyone in need of care due to age-related or degenerative diseases. At least for the next four years, and potentially beyond.

Your clients may not be concerned about their care needs in later life, believing that the government will support them financially if they re uire assistance at any point. They are probably thinking postretirement, that once the mortgage is paid off and the kids have left home, the only costs to consider might be looking into winter holidays in the sun, or their annual health club membership. It is likely that for most people the cost of care will be one of the biggest potential money pits in later years.

Conditions such as dementia, Parkinson’s and stroke highlight the need for care in old age and the huge costs associated with such care. With retirement savings unlikely to be sufficient to pay for the costs of care and the state already unable to cover 2/3rds of the cost of dementia, it means increasingly customers need to plan for their future care needs.

For advisers, this opens up a new market of existing customers looking to protect their families from the burden of care costs; wealthy clients who want help towards their care costs, not just protection for their inheritance tax bill; and new customers who haven’t yet bought protection but understand the value in protecting themselves, and their families’ futures.

The industry has a lot more work to do in raising awareness on later life conditions, and in helping to plan for these needs using new products and more holistic advice. Key to our success will be government, insurers and advisers working together, to help solve one of the greatest challenges faced by our society today.

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LifestyleCare The longer we live, the more likely we will need help looking after ourselves

It’s good news that people are living longer but the longer we live, the more likely we are to need help looking after ourselves. f one of your clients finds themselves in this position they may need to make changes to their lifestyle, like having a stair lift installed at home, getting a mobility scooter or paying for someone to cook and clean. The costs can mount up.

While the local authority is on hand to offer support, there may be a gap bet een hat they can offer and hat is anted. o bridge this gap, some people choose to dra on money they ve built up through their lives, hether that s in savings, an investment, or in the value of their home. But that means they ll have less to leave behind for their loved ones.

LifestyleCare Cover is an option that can be added to Whole of Life Cover that helps pay for support you may need in later life due to ill health.

When LifestyleCare Cover is Added to Whole of Life Cover, it Can Be Used in Two Ways s ell as getting Whole of Life Cover, your client has the option of receiving a payment

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earlier if they need support because of ill health later in life.

Once your client has decided on a total amount of Whole of Life over, they then decide ho much cover they ant to be able to access if they need support in later life. his can be anything from the minimum of £10,000 to 100% of the Whole of Life Cover, up to a maximum of , . nd they ill still have Whole of Life Cover, if they don t claim beforehand.

How the Cover Pays Out Depends on the Support Needed in Later Life f a doctor agrees that your client is suffering from one of the covered conditions or struggles to perform defined tasks on their o n.

This means they can: n

take some of the pressure off family and friends

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choose the support services that are right for them

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protect their home and any savings they have.

“LifestyleCare Cover helps your clients pay for the support they need in later life”

Case Study: Zoe Zoe takes out £100,000 of life cover when she’s 48 years old. She decides that she wants £50,000 (50% of her total amount) to be available in case she needs to pay for support in later life.

When Zoe is 62, she develops dementia. She retires from work a few years earlier than she’d planned.

Zoe’s husband, David, keeps on working but reduces his hours, so he’s got more time to care for her.

They also get support from their teenage daughter, Claire. Between the NHS and their local authority, Zoe has carers to help her at home. But with David working fewer hours, there’s a drop in their income.

We pay Zoe the first 20% of the cover she’s made available for support – £10,000. The family use this to pay for more carers, taking some of the strain from David and Claire.

When Zoe is 67, she has a stroke that leaves her needing full-time care. Her left side becomes paralysed, her speech is slurred and she has problems with coordination and balance that mean she can’t feed or wash herself, or get dressed without help.

We pay Zoe the remainder of her LifestyleCare Cover – £40,000. The family use this to make adjustments to the family home. They install a stair lift at home so Zoe can get up and down stairs, buy an electronic bed to get Zoe in and out of bed more easily, and hire a physiotherapist to help Zoe with her mobility.

Sadly, Zoe dies two years later. But because she still has her £50,000 of her cover left, she’s able to leave something behind for David and Claire. After paying for Zoe’s funeral, David and Claire decide to use the cover to pay for a short break, and pay for Claire’s university fees.

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Like Other Insurers, We Protect Your Clients When Things Go Wrong ut unlike other insurers, your clients don t have to claim to be able to benefit. hat s because e help them lead a healthier life – and re ard them for doing it. aking steps to improve members health could reduce the likelihood of them developing l heimer s, arkinson s or dementia. f they do develop one of these conditions, it can also help them to manage their symptoms.

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HELP MEMBERS TO UNDERSTAND THEIR HEALTH

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MAKE IT CHEAPER AND EASIER TO GET HEALTHIER

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GIVE MEMBERS INCENTIVES THAT KEEP THEM MOTIVATED

Getting healthier starts with understanding how healthy you already are. Members can do this by registering on the Member Zone and completing an online health review.

Once members understand how healthy they are, they can start using our partner discounts to help with things like stopping smoking, losing weight and getting fitter.

Depending on the plan, members could get rewards like discounts on days out, spa breaks, short breaks and travel, cashback, or even lower premiums.

hat s hy, hen a client takes out LifestyleCare Cover, e encourage them to lead a healthier life.

“When your client takes out LifestyleCare Cover, we help them lead a healthier life”

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Some Things You May Need To Know n

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our client can take out LifestyleCare Cover as long as they are or older and no more than . lease note that some discounts and re ards are not available to those under the age of .

LifestyleCare Cover pays your client a lump sum, to help them ad ust to ill health later in life. While it ould give them a contribution to ards the cost of any long term care they needed, it may not meet those costs completely.

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LifestyleCare Cover: At a Glance LifestyleCare Cover Helps Your Client Pay for Any Support They Need Later in Life n

When your client takes out LifestyleCare Cover, they get three things: 1. Life Cover that lasts as long as they live 2. The ability to use some or all of that life cover early if they can’t look after themselves 3. Discounts and rewards to encourage them to lead a healthier life

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That means it’s there for them if they need it, and there for their family if they don’t.

LifestyleCare Cover Pays Out if a Doctor Agrees that Your Client Can’t Look After Themselves n

We’ll pay out your client’s cover if something happens that means they can’t look after themselves.

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To determine whether or not they can look after themselves a doctor will look at six everyday activities which medical experts expect most healthy people to be able to do on their own. If they can’t do at least three we’ll pay out their Lifestylecare Cover.

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We’ll pay out 20% of LifestyleCare Cover earlier if they are living with the irreversible symptoms of Alzheimer’s disease, Parkinson’s or dementia.

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We’ll pay their remaining LifestyleCare Cover if their condition progresses to the point where they can’t look after themselves. This could also happen if they get another condition which means they can’t look after themselves.

LifestyleCare Cover lets Your Client: n

Make adjustments to their lifestyle.

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Choose the services that are right for them.

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Take the pressure off their family.

LifestyleCare Cover also lets Your Client:

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Stay healthy, so they are less likely to develop a degenerative condition, have a stroke or become frail.

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Save money through healthy discounts and rewards.

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Live life well.

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Lasting Powers of Attorney What you need to know about the changes to the Lasting Powers of Attorney rules

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The rules have changed and it’s now easier to register an LPA

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An LPA will help protect your clients’ wealth

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LPAs can generate more business for advisers, including the creation of wills, trusts and succession planning

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Contact with attorneys/family members creates new business leads Changes will help you gain trust and cement client relationships

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It’s now easier for advisers to help protect their clients’ wealth for longer. The changes to the rules around Lasting Powers of Attorney make it easier for you to help your clients register and so protect their affairs way into in the future. And this better protection for clients provides greater opportunities for advisers.

As a trusted adviser, you will know that one of the most stressful times in a client relationship is when they are no longer able to make decisions about their elfare, or finances.

This might happen because of dementia or brain injury, but

the consequences are the same: worries for the client and those around them, and potentially costly delays in receiving the assistance they need.

A Lasting Power of Attorney (LPA) is a powerful ruling that means that loved ones can make timely financial and elfare decisions on behalf of a client, rather than go through the court to apply for permission to manage their affairs.

The regulations around the creation and registration of L s have no changed. t has become simpler for a client (the ‘donor’) to appoint the people they want to look after their affairs their attorneys .

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LPAs help clients: n

Organise and plan what decisions they want taken on their behalf.

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Decide who they want to make those decisions.

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Agree how they want the decisions to be made.

LPAs help advisers:

What’s more, these rule changes provide an opportunity for you to educate your clients about the pitfalls of not having an LPA in place, and to show how you can protect their interests no and in the future.

Ensuring Your Clients Are in Control There is a wide range of products available including erious llness over and ritical llness over that provide financial support if a policy holder becomes seriously ill. o ever, that s ust the start of effective protection.

With the increasing number of later life protection products

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on the market, and more expected to be launched in the near future, an LPA becomes even more important to both client and adviser. he problem is, that without an LPA, family and loved ones may not be able to assist until someone is appointed as a court deputy by the ourt of rotection.

Family, or loved ones can apply to the court to be appointed as a deputy to make certain decisions on a client’s behalf, as an attorney ould. ut, importantly, these decisions would be restricted to the po ers specified by the court rather than by what a client chooses to specify in an L .

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Avoid delays in accessing claims.

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Protect their clients’ worth.

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Gain introductions to appointed attorneys.

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Talking point for business owners/ entrepreneurs.

This can be a time consuming process. nd it is not one controlled by the individual, which can be distressing for family and loved ones. number of issues and disagreements can quickly arise within this process, especially as to who should be appointed as deputy.

The key consideration is that at the point of claim, we need to ensure clients can access their cover as soon as possible. aving an L in place is crucial. t allo s legally recognised attorneys to make a claim and manage affairs on behalf of the donor. n L is therefore central to any protection solutions you provide.

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Case Study: William William became incapacitated and didn’t have a LPA William is a 72 year old retired solicitor, he is married with two sons and five grandchildren. Unfortunately William had a stroke and suffered both physical and mental incapacity.

William did have LifestyleCare Cover and the £250k claim was processed without the LPA, however his wife was still unable to manage the funds as they are paid into the policyholder’s bank account. His pension was also frozen in his bank account, meaning the monthly household bills could not be paid as his wife was reliant on his pension.

Not only is there a financial impact to William and his family, as he had lost his mental capacity, decisions about his care were made by the Local Authority rather than his wife.

It doesn’t just have an impact on the family, their adviser had to spend time trying to recover a damaged client relationship because they had not discussed LPA, putting other client revenue streams at risk.

William’s wife applied for a deputyship order but the anticipated time delay is 12 months.

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An LPA, which covers financial and property affairs as well as health and welfare decisions, allows the family to take control, whilst at the same time respecting the previously agreed wishes of their loved one. his is a better situation for all concerned. Without an LPA, all the necessary actions that need to be taken if a client is incapacitated are put on hold for potentially a long period.

This means that crucial steps – from accessing bank accounts, to deciding their daily care routine or where they should live, and even who should run a business – cannot be taken.

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Background: LPAs are now available in a simpler format which amalgamates the separate forms with the registration application and uses more accessible language. This has happened because of a recent review by the House of Lords Committee which found that there has been a low uptake of LPAs since their launch in October 2007. This is attributed to their perceived complexity and a lack of understanding of powers. The Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian (Amendment) Regulations 2015 introduces a simplified process and redesigned forms.

Adviser Opportunities An LPA provides clients with a high level of security. his is the biggest advantage of LPAs, however, there are also business opportunities for advisers.

Firstly, an LPA will help protect your important client relationship. rucially, it s easier and quicker for them/ their attorneys to make a claim on any policies you have put in place and access the support, and finances they need. econdly, it can open up new business for advisers, as they consult with the appointed attorneys – they may also need life, health or illness

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Fast Facts: How LPA rules The Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian (Amendment) Regulations 2015 came into force on 1 July 2015. This is what it means for you and your clients: n Simplified creation and registration process.

What happens if a client suffers incapacity and doesn’t have a Power of Attorney?

Will their bank account be accessible?

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Will their joint accounts be accessible?

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Will their business continue to operate?

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Are pensions and investments accessible?

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Can sick pay be accessed?

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Will household bills be met?

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n Current separate registration applications will be incorporated on to each form (Health & Welfare, and Property & Affairs). n Old LPA forms can still be executed until 1 January 2016. n Enduring Powers of Attorney executed before 1 October 2007 can still be used.

protection, or their o n L s.

Thirdly, you will be able to offer enhanced solutions for small business clients. o the business owners you work with have an L in place? f not, who will manage the company if they are incapacitated? These are all valuable conversations to have ith your clients.

Advisers can act proactively now and point out the importance of an LPA and the pitfalls of not having one. ou ill be able to offer a complete protection solution for your clients and the building blocks on which to develop your business.

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It’s All About Flexibility IFA Magazine talks to Deepak Jobanputra, Deputy CEO at VitalityLife, about a movement to make us all more aware of our health and lifestyle

There’s a simple driving force behind Vitality says Deepak Jobanputra, and that’s to be a force for social good. And it’s an approach which, unlike many other strategies offered by companies, tries to involve the consumers and financial advisers at a fundamental level. VitalityLife might be the new kid on the block at eight years old, it’s still a relative newcomer into the UK insurance scene.

But it already has stamped its authority on a growing market and is making its mark as the one to watch.

“We are a very innovative life and health insurer,” says Jobanputra. “Our ethos is focused around being a force for social good. We are trying to make people healthier, that’s a really big part of everything we do. So everything we do, it has to pass that test. It has to help people get healthier, and enhance and protect their lives.”

Deepak Jobanputra, Deputy CEO at VitalityLife

But Jobanputra explains that it’s the effective reachingout to its customers, and to consumers in general, which is important. It comes down to the message and how that is communicated to an audience

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which, as he admits, does “… not wake up saying ‘wow, I’m going to look at my insurance policy today’.” So Vitality is described as a simple approach in which the company tries to engage people on an honest level about their health and lifestyle behaviours.

“Our aim is to embed our shared value approach and put simply this ensures that all stakeholders benefit. ustomers benefit through becoming healthier and being rewarded for doing so, brokers benefit through richer products that support advice and very importantly society benefits through having a healthier population. This reduces pressure on the welfare state.”

including his or her eating, sleeping, drinking and working habits amongst others.

From that, it calculates a person’s ‘Vitality Age’, which is measured against their chronological age. In an ideal situation a person’s Vitality Age might be below their chronological age, of course, but sometimes it might be the other way round. But leading on from the questionnaire, people are given ways to improve their ‘Vitality age’.

A personal pathway, which might suggest they exercise three times a week, or cutting back on some habit which will allows them to better manage their health.

Know Your Numbers he first component, he says, centres on trying to get people to understand some of the basics about their health.

“It’s something we call know your numbers,” he explains. “It’s all about understanding things like your blood pressure, cholesterol, blood glucose numbers. On the face of it, those things are quite simple, but if you start talking to consumers quite coldly about that, it can switch them off.”

“So we have developed tools which try and engage with the customer. We have simple health checks, these can be accessed in different forms, either online or through our partners, one such example is through our partnership with LloydsPharmacy. People can easily go into one of their many stores and have a very simple health check. They can get to understand their numbers, and from this they can gain insight to see if there is something out of the accepted range.”

A Personal Pathway Vitality also has an online health questionnaire which asks about a person’s lifestyle,

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“Our ethos is focused around being a force for social good. We are trying to make people healthier, that’s a really big part of everything we do”

that?). He says that just this one device alone has brought about a dramatic change in people’s behaviour: “We have a lot of evidence and case studies that show behavioural change, - people get off at a station earlier than their usual stop, take the stairs, or deliberately go out for a walk. We’ve got so many examples of where it’s actually having a positive effect on people’s lives.”

Partnerships The next element of the Vitality approach is reward.

For Jobanputra, this element is essential, because he says it’s not just about understanding your health but also having an incentive to improve it.

Therefore you engage, take action and get rewarded. As Jobanputra says, “we’ve seen tremendous success over the last five years in simply engaging people in healthy behaviour.”

The range of rewards are aimed at ensuring a broad appeal and ones that can be used daily. Rewards include 50% off at Evans bikes, LloydsPharmacy spend, Sweatshop, 40% off British Airways and Eurostar tickets, 75% off a visit to Champneys and a whole lot more. Other rewards that are proving successful are weekly cinema tickets and drinks at Starbucks.

And so to the IFAs

Incentives and Rewards VitalityLife doesn’t just recommend change, however. It actively encourages improving healthy lifestyles, providing incentives which might include 50% off a membership from a Virgin gym, for example.

And then there are discounts on items such as wearable tech devices which will help people make genuine changes to their lifestyle.

Jobanputra cites the example of pedometers, which can help wearers achieve the Government recommended level of 10,000 steps a day.

(How many of us fall short of

Which brings us to Vitality’s engagement with the financial adviser ho may be involved in recommending its programmes. “The UK market in life insurance protection is fairly commoditised,” explains Jobanputra, “and products tend to be very similar. Price plays a big role - but we come in with a very differentiated range of insurance products.”

Vitality says that it has had some useful successes in getting advisers involved. “We have examples of brokers who recently have started to engage their own Vitality coaches,” says Jobanputra, “so that the broker will actually advise

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on the policy, but also have a Vitality administrator. So they are actually investing money themselves to get their client engaged in healthy behaviours.

This is really taking off quite strongly and is supporting the broker’s business.”

The advisers, he says, welcome not only the fact that they are able to offer advice on a genuinely differentiated product, but also that they themselves encourage a healthy engagement on their own part. If they are living and breathing and experiencing it, says Jobanputra, they’re more likely to think “wow, it actually does work.”

Vitality says that its parent company, Discovery is growing the same model in many countries around the world and there is evidence that its revolutionary approach is having a positive effect for its customers and society. But that doesn’t mean that the company can rest on its laurels. Its position near the head of a very competitive market relies on continued product innovation, which Jobanputra says is driven in turn by its adherence to introducing innovative products.

The Care Question One critical illustration of this, says Jobanputra, is the company’s LifestyleCare Cover product which sets out to address a social issue which is increasingly worrying people and the government.

“The great news is that we’re all living longer and life expectancy is increasing by many weeks every year.”

Office for ational tatistics data show that male life expectancy at age 65 in the UK increased by 40% between 1980-1982 and 2010-2012 to 18.2 years for men, while female life expectancy improved by 23% to 20.7 years.)

“Life expectancy is being driven by medical advances, so

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people are living longer. But it also means that they have to manage the conditions that they are living with, such as frailty or heart disease.”

“The need for elderly care is on the increase and this is only going to grow” he says. “It’s estimated that 60% of over-65s will require care at some point in their lives, and we all know the pressure coming from the Government as regards welfare cuts. So, as we become older and frailer, how are we actually

We’ve extended the [life cover] concept to say that if you get diagnosed with a major condition such as dementia, we will pay your chosen proportion of money to you, which could help fund care

going to access the care that we need? As a result of our conversations with specialists up and down the country, we have developed a solution for that.”

A Flexible Solution The Vitality solution is simple: to make money available when it is needed by customers. As Jobanputra puts it: “You buy life cover for the whole of your life. Customers pay premiums, and when they die, their estates are guaranteed to get a payout. But we have extended that concept to say that if you get diagnosed with a major condition such as Alzheimer’s, dementia or Parkinson’s, we will pay your chosen proportion of that money to you, which can be used to fund care. It adds greater flexibility, because you’re not having to wait to die to get the money. After all, if something goes wrong, that’s when you need the money.”

“If the condition progresses and you are unable to handle some of the basic actions of life, such as your mobility being constrained, or if you are unable to feed, wash yourself, or dress, then these are well defined problems, have clinical terms and are measured by . ere again e ill pay out another sum of money to help the customer.”

Vitality points out that it has spent a lot of time talking to its customers and brokers before introducing the LifestyleCare Cover product. This research showed that this is a highly valued solution. Both consumers and brokers over-estimated the likely cost by between two to three times its actual cost.

Vitality, then, has set out its stall with an apparently lofty ambition to be a force for social good - but it’s obvious that it’s serious about pursuing this kind of innovative and holistic approach to lifestyle and healthcare. And that, in turn, is likely to make waves that will keep on spreading.

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Cost of Care The Care Act

THE STATE WILL ONLY HELP PEOPLE WITH ASSETS WORTH LESS THAN

£72,000

Property and pensions are largest assets for most people

£118,000

The lifetime care cap has been postponed until 2020 and will come in at £72,000

Individual Cost of Care AVERAGE COST FOR A RESIDENTIAL CARE HOME (in England)

£5

PER

32

WE

EK

AVERAGE COST FOR A NURSING HOME (in England)

£27 ,6 PER 64 Y EAR

£7

PER

50

WE

EK

60%

of people over 65 will require some form of care

£39 ,0 PER 00 Y EAR

The Need for Care ONE IN THREE people over 65 will develop dementia

37%

of people said their main worry for the future was becoming a burden on their friends and family

14

It costs around £11,000 per year if you have a carer visit for 14 hours per week Amount it costs per year for full-time care during the day

£30,000

Total Cost of Care Healthy Living

around

People who follow 4 OUT OF 5 healthy behaviours are 60 per cent less likely to develop Alzheimer’s and other forms of dementia in old age than those who followed none

£26BN

Sources: Department of Health, Institute and Faculty of Actuaries, Alzheimer’s Research Society, Alzheimer’s Society, Money Advice Service, BBC. All information correct as at November 2014.

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