annuity for care home fees

jools55

ive heard that for a lump sum payment an annuity can be bought to pay for care home fees. has anyone done this and would it be an acceptable solution for a 91 year old considering going into a care home

sleepless_saver

It's definitely worth looking at as an option. Whether the figures stack up will depend on the quotes you get and how they compare with the other funding options. Basically you are taking a view on how long someone is likely to live by comparing the likely cost with paying for fees from capital (or from e.g. renting out house) or the initially higher cost of buying the immediate care needs annuity.

You need to use a suitably qualified IFA for this as if I recall rightly the very small number of providers don't deal directly with the public.

I looked at this for two relatives, one died before it was possible to assess the options, in the other case it made more sense to pay from capital.

le_loup

Agree with ss.
When you have a quote, you can work out the break even point and make a judgment of how worthwhile it will be.
Couple of points:
If the money is paid to the care home it's tax free.
You don't need to cover the total fees, you will have pension and attendance allowance to cover part of the cost.
In my case with a 90 y o the break-even was 4.5 years with a 5% annual increase.

What this option gives you is certainty and if you don't recover all the premium cost, it's like fire insurance, you don't expect your money back if there's no fire. If you do, then that's a bonus.

If you can find out the age at which the person will die, that will help the consideration immensely!

xylophone

http://www.sharingpensions.co.uk/annuity_immediate_needs.htm
might be worth a read.