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  • FIRST POST
    • rebecca1
    • By rebecca1 15th Aug 17, 9:29 PM
    • 71Posts
    • 12Thanks
    rebecca1
    Care Annuity advice
    • #1
    • 15th Aug 17, 9:29 PM
    Care Annuity advice 15th Aug 17 at 9:29 PM
    My local hospital recommended that my father aged 97 be admitted into a Nursing home after several falls at home.
    As the Nursing fees are so high, it wont be long until he small amount of savings are gone and I have to sell his flat to pay the Nursing Home fees.
    He was assessed today and I was advised that he will not qualify for the Continuing Health care fund (this is difficult to get) but hopefully the Nursing Care Fund. He is already getting the higher rate Attendance allowance.

    I am worried that his fees will quickly burn through his savings and equity of his flat and he will be forced to go into a different home which is not so nice. I was contemplating getting an annuity quote, I was informed that you pay out a fairly hefty lump sum initially and the care fees are then taken care of (with a built in allowance of rise in fees of 4% per year) until my father passes away.
    Without wanting to sound heartless, I have to think that given his age he could pass away shortly after I have paid out a lump sum.
    Or he may live another 4/5 years in which case I do not have to worry about the care home fees at all.... slight peace of mind there!It is a bit of an unsavoury gamble. I am sure the annuity company would like to make money here, has anyone had any experience of taking an annuity out they are willing to discuss here and how it went for them?
    I'm sure there are quite a few pitfalls to watch out for and the thought of parting with a huge sum of of my fathers money is quite a responsibility... I'm having sleepless nights on this decision..
    Any input gratefully received.
    Thanks Rebecca
Page 2
    • LHW99
    • By LHW99 4th Sep 17, 1:27 PM
    • 858 Posts
    • 684 Thanks
    LHW99
    If his health deteriorates towards the end ask for a reassessment for Continuing Health Care eligibility, which can be fast tracked if dad is terminal. This will cover the whole cost.
    IMO it may be unwise to rely on this happening. My mum suffered a stroke, and at the end could not speak, move and had to be fed via a tube. We could not get her assessed for continuing care, and at that point I was totally unable to cope with the hassle of trying to deal with the system. Thankfully (in a way) it was for a short time and her assets more than covered the cost of the few weeks she had in care after the initial weeks ran out.
    • Malthusian
    • By Malthusian 4th Sep 17, 2:46 PM
    • 2,887 Posts
    • 4,127 Thanks
    Malthusian
    You're making the classic mistake of assuming that of two investments, one of which is highly illiquid (e.g. a house, or a P2P loan) and the other of which is highly liquid (e.g. a stockmarket fund), the illiquid one is safer because its value appears as a smooth line while the liquid one's value appears as a wavy up and down one. This is not correct. The illiquid investment's value changes every minute of every day, just as the liquid one's does. However because the liquid one is traded frequently you can see what is value is every minute and plot a graph, whereas you can't plot the up-to-the-minute value of the illiquid investment because not enough people are buying it.

    At present the value of P2P loans appears stable because people tend to only sell them when they can get par value for them, or something close to it. And they usually can get par value for them, because of the amount of money flowing on to P2P platforms, from people who are desperate for yield, and will therefore buy any old crap that the platforms offer to them. (Eventually. The fact that it took days to encash a piddling £60,000 illustrates how illiquid they are. Compared to mainstream stockmarkets where tens of millions of pounds can be sold near-instantly, that is glacial.)

    This is not going to be the case in a crash. What happens when everyone wants to get out of P2P rather than get into it? I'm guessing you will say: the borrowers will probably repay their loans on time in which case everything will be fine. The OP however has to consider what will happen if that isn't the case. If she is relying on the yield from P2P to pay care fees and the yield dries up due to defaults, she will need to sell down the capital; and if the capital is invested in illiquid loans then that is a grim prospect.
  • jamesd
    You're making the classic mistake of assuming that of two investments, one of which is highly illiquid (e.g. a house, or a P2P loan) and the other of which is highly liquid (e.g. a stockmarket fund)
    Originally posted by Malthusian
    P2P is not generally highly illiquid, as I illustrated partly with the Ablrate example. Again, you're misrepresenting how P2P normally works. All three of the biggest UK P2P platforms and the three I'd normally mention here have normal selling times for untroubled loans that are typically from a few seconds to a few days.

    Ablrate publishes total loans made and total value of secondary market trades on their home page. At the moment £26,724,184 and £8,314,038. That's a lot of trading going on for the size and MoneyThing is similar, so there is decent price discovery at Ablrate.

    The fact that it took days to encash a piddling £60,000 illustrates how illiquid they are. Compared to mainstream stockmarkets where tens of millions of pounds can be sold near-instantly, that is glacial.
    Originally posted by Malthusian
    If I was to put any or all of the MoneyThing loans I'm holding on the market now I'd probably have them all sold and the money in my bank account in an hour. Even that selling at Ablrate would have got the money into a bank account faster than the stock market trade. That's because stock market trades are normally settled (paid for) three business days after the day of the trade. I don't think that trade day plus three day stock market minimum time is glacial even though it's longer than I usually expect for P2P.

    This is not going to be the case in a crash. What happens when everyone wants to get out of P2P rather than get into it? I'm guessing you will say: the borrowers will probably repay their loans on time in which case everything will be fine. The OP however has to consider what will happen if that isn't the case. If she is relying on the yield from P2P to pay care fees and the yield dries up due to defaults, she will need to sell down the capital; and if the capital is invested in illiquid loans then that is a grim prospect.
    Originally posted by Malthusian
    What crash in the value of lots of P2P loans? That's unheard of in UK P2P but routine in stock markets. P2P yields don't dry up due to defaults, only the defaulted ones stop paying, either during debt collection or for a few seconds while a protection fund repays the capital. The rest just keep making their payments.
    Last edited by jamesd; 11-09-2017 at 11:41 AM. Reason: typo
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