HEALTH ministers are considering radical plans for “inheritance insurance” so OAPs in care don’t ever lose their home to pay the bills.

The Sun can reveal the Government is looking at proposals that would significantly reduce the growing burden on cash-strapped councils from Brits living longer.

It could form a key part of new Health Secretary Matt Hancock’s delayed social care ‘green paper’.

Under the move, elderly Brits would take out money from their pension pot in a tax-free lump sum – and buy a new insurance product.

The insurer would take on the responsibility for paying for their care – and guarantee to protect their home so it can be passed onto the kids.

Currently, the state can take up to the last £23,500 of an individual’s wealth to pay the care – from income, investments and property.

Royal London policy chief Steve Webb – the ex-Lib Dem pension minister – has lobbied for the move in talks with Whitehall officials.

He told The Sun: “Every year tens of thousands of families have to sell the family home to pay for the care they need – and that number is set to rise.

“There must be a better way.

“With government help, it ought to be possible to take out insurance so that the family home is safe to be passed on to the next generation, even if you face heavy care bills.”

New legislation would be required to introduce the necessary tax relief on pension withdrawals.

Experts claim there will be a £5.5 billion funding gap in social care in 2020-2021 – rising to £12 billion by 2030.

Chancellor Philip Hammond promised 17 months ago to lay out plans to plug a huge hole in social funding given the projected rise in the number of over 65s and 85s living in Britain.

The paper was delayed until the autumn by ex-Health Secretary Jeremy Hunt in June – when he separately announced £20 billion windfall for the NHS.

Theresa May was forced to scrap plans for a revolutionary revamp to social care in last year’s ‘dementia tax’ Election debacle.

The Tory Manifesto proposed that no one with less than £100,000 would have to pay for their care. But they scrapped plans for a cap on the maximum that could be taken from an individual’s nest egg.

The PM was forced to drop the plans in an emergency u-turn just four days after they were unveiled in the face of a major Tory revolt.