Dependency: a ticking timebomb

The problem of the aging population and people’s future dependency needs is not being addressed sufficiently

30 October 2012
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The problem of the aging population and people’s future dependency needs is not being addressed sufficiently by the state, associations helping the elderly fear. Private insurance is increasingly popular

THE ticking demographic time-bomb of France’s increasingly aging population and its dependency issues urgently needs to be addressed by the state, warns a federation of associations which aid the elderly.

FNAPAEF says the vital issue of helping people fund their dependency needs in old age is “dormant” as the state focuses on what it sees as more pressing issues, such as the economy.

As a result more and more people are taking matters into their own hands with private insurance against the day when they may be old and frail and in need of extra help at home or a care home place.

Such policies may give added peace of mind. However FNAPAEF president Joëlle Le Gall said the state must take the problem in hand. It was prioritised by the Sarkozy government before being dropped in 2011. The new Elderly People and Dependency Minister Michèle Delaunay has merely spoken of a law “before the end of the first half of the presidency” [ie. the end of 2015], and even of “responses this decade”.

Ms Le Gall said: “We’re not against someone taking out private insurance as long as it’s a complement, to make themselves more secure, but we don’t want this to be the main solution for financing an elderly person’s dependency needs.

“For a start, if a person today takes out a policy it’s hard to predict what his or her needs will actually cost in a few decades time, so there is uncertainty; plus in most cases the amounts paid will be far from adequate. Today the average cost of a retirement home for dependent elderly people is 2,200 per month and if you want to stay in your own home - a lot of people’s first choice - if you need a lot of help with daily life you are looking at €5-7,000 per month to cover all your living costs.”

For those who do wish to provide for their old age, an assurance vie (a popular form of long-term saving) is an alternative to the specialised policies, she said.

FNAPAEF believes a new branch of social security helping all those who can no longer look after themselves alone is needed to address the problem properly.

The APA benefit - the main tool used at present (see right) - is far from sufficient, Ms Le Gall said. “For over-sixties, if you have major loss of autonomy, and have a low income, the maximum you can get is €1,288/month. For younger people it is possible to receive up to €10,000, so there is an enormous difference.

“I’m not saying the needs of an elderly person are the same as those of a child who needs to be accompanied at school, but for anyone with a handicap there must be an evaluation scale that works out their needs and the means to cover them - not by your own income or by selling your home, but by a system of social security insurance as for health. Mutuelle insurers could also cover a part.”

She said the government has shown a will to help but associations helping the elderly are keen to see them start work on this so-called “fifth (social security) risk” (the others being illness, work accidents, retirement and family matters).

The minister in charge has said likely action by the state will include raising the maximum amounts of benefit for dependent people, which she has admitted are “insufficient”.

In the meantime, a study shows that last year private policies taken out for dependency rose by 8%, the large insurer AXA said. It is estimated that one and a half million are insured against the risk. Exton Consulting found that the policies are mostly taken out by middle earners. People living alone or in isolated areas were most likely to have one.

Such schemes may offer a capital payout when you become dependent and/or a monthly allowance, with cover varying according to the policy chosen, the agreed amount of the premiums and how dependent you become (a four-stage system is used in the sector, called GIR4 to GIR1, the latter being the most serious).

As with other such policies, the English-wording one offered by Exclusive Healthcare through AXA varies in cost according to your age when you take it out and how high you want potential monthly payments to be. A monthly €1,000 in the case of total dependency is €44/month if you start at age 60, €73 at 70. It is not available after 75.

Charles Wilson, managing director of the firm, said: “It is important to keep in mind the financial danger as well as the suffering, should dependency occur. Few families can finance up to €3,000 a month out of taxed income, and there may not be liquid assets to sell.”

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