Most UK Adults Unprotected Against Serious Illness: What Over-55s Should Consider

The scale of the protection gap

Consistently across multiple research sources, more than 60% of UK adults report having no critical illness cover and no income protection policy in force. For working-age adults with dependants and mortgages, this is widely recognised as a planning gap. For those approaching or in retirement, the gap tends to be rationalised: the mortgage is paid off; the children are grown; employer-provided group schemes have ended.

But the financial risk of serious illness does not end at retirement. In many respects, it intensifies. A serious diagnosis in your 60s or 70s may mean: extended periods of reduced mobility requiring care; adaptation of the home; private treatment costs where NHS waiting times are impractical; and — if you are the primary carer for a spouse — the cost of covering your own absence from that role.

Residential care costs in the UK average over £56,000 per year (Laing Buisson 2025–26 data). Even a short period of residential care following a serious illness can represent a significant financial shock to a retirement plan that has not modelled this scenario.

Why mainstream protection becomes harder to access after 55

Critical illness cover and income protection policies are priced on the basis of age, health, and the risk of claim. After 55, several factors combine to make mainstream products less accessible:

• Premium loading: Critical illness premiums at age 60 are typically three to four times those at age 35, for the same sum assured. Many people find the cost disproportionate relative to the benefit.
• Cover term limits: Most critical illness and income protection policies have a maximum cover term ending at age 70 or 75. This means new policies taken out at 60 or 65 offer only a short protection window — and may expire precisely when the risk is highest.
• Pre-existing condition exclusions: Insurers exclude conditions that were diagnosed or treated before the policy commenced. Older applicants typically have more medical history, which means more potential exclusions — potentially leaving the most likely risks uncovered.

This does not mean protection products are irrelevant after 55 — a whole-of-life policy, a over-50s plan, or a life policy in trust may still have a role, particularly for IHT planning. But the mainstream income protection and critical illness market does become less accessible with age. This makes other contingency planning more important, not less.

How a drawdown lifetime mortgage could serve as a care contingency reserve

One approach that later-life lending specialists increasingly discuss with clients is establishing a drawdown lifetime mortgage facility specifically as a care and contingency reserve — not to be used for everyday income, but to be available if a serious illness or care need arises.

The mechanics are straightforward. A drawdown lifetime mortgage establishes a pre-agreed cash reserve against your property. You draw nothing initially — so no interest accrues. The facility sits available, underwritten and agreed, for use if and when you need it. If a care need arises, you can draw funds without reapplying for credit or undergoing a new property valuation. The terms are locked in at the time of establishment.

This approach has several advantages for care planning:

• The facility is available immediately when needed, without the delays of a new application during a health crisis
• Interest only accrues on amounts actually drawn, so the cost of "holding" the reserve is minimal until funds are needed
• The facility does not depend on your health at the point of drawing — it is already agreed and secured
• It can sit alongside pension income, savings, and any remaining protection cover as one component of a diversified contingency plan

As with all equity release products, this approach reduces the value of your estate and must be considered in the context of your overall financial and estate plan. FCA-regulated advice from Verity Home covers exactly this kind of holistic planning discussion.

NHS Continuing Healthcare and what it does and does not cover

Some homeowners assume that NHS care will cover their needs in retirement, removing the need for private contingency planning. It is important to understand what NHS Continuing Healthcare (CHC) does and does not provide.

CHC is a package of ongoing health and social care arranged and funded by the NHS for individuals with a primary health need. It is available to people of any age and is free at the point of use — but eligibility is narrow. The assessment process is demanding, and approval rates vary significantly by geography. Many people with serious illnesses — including dementia, cancer, and serious mobility conditions — are assessed as not qualifying for CHC because their need is classified as primarily a social care need rather than a health need.

Social care — residential home care, domiciliary care, and home adaptations — is means-tested and is largely not funded by the NHS. The combination of a narrow CHC eligibility threshold and a means-tested social care system means many retirees face substantial care costs that are not covered by either the state pension or NHS entitlements. Private contingency planning — including through later-life lending — is a practical response to this reality.

A practical planning checklist for over-55s

If you are in or approaching retirement and have not recently reviewed your contingency planning for serious illness, consider the following:

• Do you have a Lasting Power of Attorney (both property and affairs, and health and welfare) in place? This is foundational — without it, a serious illness that affects capacity can mean no one is legally able to act on your behalf.
• Have you modelled what residential care at £56,000+ per year would mean for your retirement savings? How many years of savings would it consume?
• Is there a drawdown equity release facility that could be established now as a reserve for future care costs, without drawing any funds immediately?
• Have you reviewed whether any existing life policies are written in trust — meaning the proceeds would not form part of your estate for IHT purposes?
• Do your children or next of kin know where your key documents are kept, and what your wishes are regarding care?

None of these items requires an immediate financial decision. But all of them benefit from being considered in advance — and a Verity Home consultation is a natural starting point for the later-life lending piece of this picture.