annuity plans to cover care home fees
- Thread starter kkerr
- Start date
So you mean if her medical situation changed and her fees were paid fully by the state? Then the care fee annuity would be converted to a simple annuity and the same monthly figure would be paid into her bank account, the difference being that as a care fee annuity it's paid directly to the care home and is tax free, but if paid into her account it becomes liable for tax.
It looks like your quote was quite similar to ours, in that the capital investment would be used up in approximately 4 years.
One question for anyone else who is considering this route. You need to find out how they will deal with the scenario where under the new Care Act a resident reaches the 'cap'. I know it will take a while for anyone to get there though!
One question for anyone else who is considering this route. You need to find out how they will deal with the scenario where under the new Care Act a resident reaches the 'cap'. I know it will take a while for anyone to get there though!
Both the annual hotel costs and life time care cost are accrued using the LA estimate of fair charges not the actual fees charged so it can take longer than expected to reach the caps.
Also from April 2016 first party top up will be allowed without the current restriction of there being a deferred payment scheme in place.
8.5. We want to facilitate choice for everyone who receives local authority financial support
and can afford to make additional payments for a preferred choice of accommodation,
enabling them to spend their own money in the way they wish. We will therefore be lifting
restrictions on first party top-up arrangements in the choice of accommodation regulations to
allow people who want and can afford to do so to make affordable and sustainable ongoing
top-up payments from their own financial resources for a preferred choice of accommodation
that meets their needs. This will be the only change to those regulations.
Page 41
https://www.gov.uk/government/uploa...3104_Care_Act_Consultation_Accessible_All.pdf
Also from April 2016 first party top up will be allowed without the current restriction of there being a deferred payment scheme in place.
8.5. We want to facilitate choice for everyone who receives local authority financial support
and can afford to make additional payments for a preferred choice of accommodation,
enabling them to spend their own money in the way they wish. We will therefore be lifting
restrictions on first party top-up arrangements in the choice of accommodation regulations to
allow people who want and can afford to do so to make affordable and sustainable ongoing
top-up payments from their own financial resources for a preferred choice of accommodation
that meets their needs. This will be the only change to those regulations.
Page 41
https://www.gov.uk/government/uploa...3104_Care_Act_Consultation_Accessible_All.pdf
One thing I'd like to add to this. We started off, way back in summer last year, by turning to SAGA for advice on care fees. This, we thought, would be a safe and sensible option. However, while I have absolutely nothing but good to say about the person with whom we dealt, who was utterly professional and sensitive, it seems that SAGA only deal with one of the three firms (Just Retirement) that offer care fee annuities.
Thankfully, my sister wanted us to also go to a financial advisor, who then brought in quotes from all three firms, including a new one from Just Retirement, and the latter was by far - and I mean £30,000+ - more expensive, in both the quote via SAGA and via the financial advisor.
Thankfully, my sister wanted us to also go to a financial advisor, who then brought in quotes from all three firms, including a new one from Just Retirement, and the latter was by far - and I mean £30,000+ - more expensive, in both the quote via SAGA and via the financial advisor.
For younger people?
Hi there
I am currently trying to find a annuity for my Mum to look after her care needs but to my horror I can't seem to find one that would accept her due to her age. She is currently 54 and in the hospital with mid/late stages and going into a care home in 2 weeks time. Does anyone know if there is a product that we could look at as this seems ridiculous.
Thanks
x
Hi there
I am currently trying to find a annuity for my Mum to look after her care needs but to my horror I can't seem to find one that would accept her due to her age. She is currently 54 and in the hospital with mid/late stages and going into a care home in 2 weeks time. Does anyone know if there is a product that we could look at as this seems ridiculous.
Thanks
x
Wouldn't you be better renting out their home. I get £425 a month for my mums and £600 for my aunts. They go a long way towards their care home fees. I kept on top of mums home so there was nothing to do but paint it.
My aunt needed a new kitchen, bathroom and rewire and replaster and spent £12,000.
My aunt needed a new kitchen, bathroom and rewire and replaster and spent £12,000.
Hello, and really sorry that you're having to deal with all this. There are, to my knowledge, only three companies dealing with care fee annuities in the UK, and that's Just Retirement, Partnership and Friends Life, so make sure you've approached all of those. I would have thought that the stage of your mum's illness should be the major determining factor on whether or not they'll give you a quote, though the whole thing for them is a gamble and perhaps they do have an age cut-off.
As for dottyd's suggestion of renting your mum's home (assuming she owns her own home), I know that for us that was a non-starter given that our mother's care home costs £650/week, so to get even close to covering that we'd have to be getting £2000+ a month in rent. In our case that was utterly unrealistic.
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I'm currently looking into annuities for Mum.
I understand that you can acquire capital protection(insurance) when you buy an annuity, though no doubt that makes it more expensive. Then in the event the person dies sooner han expected, you can get most of the money back.
Does anyone know how much this insurance costs?
I understand that you can acquire capital protection(insurance) when you buy an annuity, though no doubt that makes it more expensive. Then in the event the person dies sooner han expected, you can get most of the money back.
Does anyone know how much this insurance costs?
It depends entirely on the size of the annuity, and the type of cover, because it's a percentage, so it's best to ask for quotes and see the figures for your particular circumstance. The annuity we bought with Partnership has some limited protection built-in, but had we gone with an option that offered a paid-for protection, we wouldn't have taken the protection as it didn't seem worth the extra expense.
It's all a gamble, if you live long enough to get all your money back and then live some more years then you win, if you buy an annuity and pop off a week later you lose the lot. If on the other hand you keep the money and pay the care home fees yourself then you're gambling that you'll run out of steam before you run out of money.
The older and more infirm you are the less you have to pay for an annuity of £XXX per week the younger and healthier you are the more you'll have to pay.
You really have to shop around as prices vary very widely and Individual Financial Advisor's are paid commission.
You very much "pays your money and take your choice" on this one. Some people would watch the money going out of the bank every month and not be able to sleep at night worrying it may run out, other much less so.
As none of us know how long we have left then it really is a gamble, you can only look at the figures and see what you believe makes the best sense to you.
As an aside there has been some excellent advise on this thread from the other posters, well done you.
K
The older and more infirm you are the less you have to pay for an annuity of £XXX per week the younger and healthier you are the more you'll have to pay.
You really have to shop around as prices vary very widely and Individual Financial Advisor's are paid commission.
You very much "pays your money and take your choice" on this one. Some people would watch the money going out of the bank every month and not be able to sleep at night worrying it may run out, other much less so.
As none of us know how long we have left then it really is a gamble, you can only look at the figures and see what you believe makes the best sense to you.
As an aside there has been some excellent advise on this thread from the other posters, well done you.
K
I couldn't lay my hands on any figures when I first replied, but here's one option we were offered (we actually took a better deal, via Partnership), just to give a very rough idea of what you might face:
Cost of annuity with no protection: £115,500 (for an annual payout of £19,000).
Adding protection that would pay back 50% on my mother's death, at any point in the future, would have cost an extra £9000.
Bear in mind that 50% means 50% of what's left once any set-up fees (in this case £1800) and any payouts up to that point are taken off. Mum wouldn't have had to live very long before that extra £9000 became an unnecessary expense.
Also bear in mind that (I think) all three companies that quoted offered a basic protection whereby if Mum died very soon after taking out the annuity, such as within a month, then a large percentage would be returned.
Deferred Payment Scheme ...
I have requested my LA to arrange a contract with the CH under the Deferred Payment Scheme, meaning that the property does not have to be sold and will be rented instead to help towards the CH fees (which is now a right under the 2015 Care Act) and the LA will pay the difference between client's contribution and cost of the home (in our case it will be around £350 a week) , the debt will accrue and be repaid to the LA on sale of the house following my mother's passing. Has anyone else entered into this type of agreement?
I have requested my LA to arrange a contract with the CH under the Deferred Payment Scheme, meaning that the property does not have to be sold and will be rented instead to help towards the CH fees (which is now a right under the 2015 Care Act) and the LA will pay the difference between client's contribution and cost of the home (in our case it will be around £350 a week) , the debt will accrue and be repaid to the LA on sale of the house following my mother's passing. Has anyone else entered into this type of agreement?
"... the debt will accrue and be repaid to the LA on sale of the house following my mother's passing..."
Also as a result of the Care Act the LA can charge interest up to a maximum as defined >>>HERE<<<
Also as a result of the Care Act the LA can charge interest up to a maximum as defined >>>HERE<<<
Taking Mick_P's example
"Cost of annuity with no protection: £115,500 (for an annual payout of £19,000)"
as a very rough guide your figure of £50k annual payout would mean a premium of ~£300k.
Every case is different and depends on the actuarial life expectancy.
Any pensions and AA will knock a few grand of the cost.
"Cost of annuity with no protection: £115,500 (for an annual payout of £19,000)"
as a very rough guide your figure of £50k annual payout would mean a premium of ~£300k.
Every case is different and depends on the actuarial life expectancy.
Any pensions and AA will knock a few grand of the cost.
Yes, what a financial adviser will do is work out the person's income and the care fee annuity will cover the difference, leaving a little spending money. If you do go with a financial advisor, it might be worth making sure they have SOLLA (Society of Later Life Advisers) accreditation.
I'm looking for annuity which will cover the cost of nursing home fees. From visiting a number of homes in our area, this means an annual fee of £50K upwards. That's the minimum fee per annum for a basic no frills nursing home.
That's why the big companies see it a such a good business to get into. A reasonable price on a cruise ship is about £100 - £150 a day and for that you get: all the food you can eat, free drinks and you get to see the world. A budget chain hotel in the UK costs around £60 a night (per booked) where care home cost come from is a mystery to us all, Some (usually privately run) are very, very good and worth every penny and although someone with "low dependency" may be paying a bit over the odds at first when later they need more care the costs stay the same so it all balances out.
Bigger company ones run on a different ethos and for profit.
K
