Ending up old, alone and unable to afford proper nursing care is many people's worst nightmare. But for those keen to ensure that their final days are not dogged by financial worries, the choices to date have been limited.

At present, the State is the primary financier of formal long-term care while people's own assets and financial assistance from their families also play a part.

But those who don't want to rely on what the State has to offer, who are reluctant to sell the family home to pay for quality care or who cannot depend on children, nephews or nieces to look after them have faced difficulties making provision for their future.

Despite the escalating cost of care, with a single room in a nursing home in Dublin now costing up to £650 (€825) a week, there are no long-term care insurance policies on the market. However, the Minister for Finance, Mr McCreevy, has taken the first step to encourage the development of such a market.

An amendment to the Finance Bill provides tax relief, at the standard rate, for insurance for long-term care, similar to the relief already in place for medical insurance. The relief will be granted at source and the benefits from the insurance policy will be exempt from taxation.

The move has been welcomed by the Irish Insurance Federation (IIF) which lobbied for the change although it remains concerned that the fiscal incentive - tax relief is granted only at the standard rate of 20 per cent - may not be enough.

"We don't see it as a rocket powered market and would suggest a rethink on the taxation arrangement," says IIF chief executive, Mr Mike Kemp. "However, it's a pretty good first step."

The change is expected to lead to the introduction of products specifically tailored to provide for long-term care and a number of financial institutions, including the VHI, are looking at developing packages in the area.

However, exactly how such packages will be structured remains to be seen.

Ms Joyce Brennan of Arthur Andersen points out that there are difficulties in pricing such a long-term policy. Also, in markets where such policies are available, they vary considerably with some paying out lump sums while others provide regular income and yet others are linked to the sale of the family home. When assessing such products, consumers will need to ensure that they are fully covered for all costs, no matter how long they may need to avail of nursing care.

Ms Brennan also notes that this market has been slow to take off in Britain.

"People are confused as to what the State will provide and what is up to themselves," she says. "There is a feeling that the NHS will look after them, that they won't be left destitute."

However, the health insurance market is well developed in the US, where there is far less State provision for the elderly to fall back on. According to Ms Ann O'Dwyer, who runs Retirement Home Information Service, she has seen a number of pensioners in the US enjoy the fruits of their advance planning for old age.

"The lack of worry they had from the time they retired was great. It's a great cushion to know that you're not hoping a nephew is going to keep you."

Meanwhile, for those not interested in paying for yet more life assurance, the launch of two equity release products on the financial marketplace in recent months has widened the options available to retired homeowners.

Bank of Ireland and Residential Reversions Ltd are both offering products that allow people to tap into the equity built up in their houses.

The Bank of Ireland Life Loan product is available across the State and gives homeowners aged 65 or over a roll-up mortgage for up to 30 per cent of the value of their property.

Residential Reversions allows qualifying homeowners over 70 in the greater Dublin area to sell a stake in their home in return for a lump sum, a guaranteed monthly income or a combination of the two.

According to Ms Joan Gleeson, Bank of Ireland has seen huge interest in its product with 350 loans, averaging £45,000 each, advanced in the seven weeks since the product became available.

On the downside, those advising elderly people say that availing of such equity release products can lead to tensions within families, particularly if children feel their inheritance is being frittered away for frivolous purposes rather than for the more serious end of meeting nursing care costs.

Finally, for those whose children are prepared to pay toward their nursing home costs, covenants remain a tax efficient means of supporting an elderly parent. Once a covenant is set up through the Revenue, the donor or donors may claim income tax relief on payments made under the deed.