Insurance against care costs

Malthusian

Nebulous2 wrote: »

Remember many people don't need care, so paying for something in advance may mean it never pays out.

A deferred care annuity will pay out when the deferral period ends whether you need care or not. So there is no possibility of it never paying out. The problem is that if you aren't in care when it pays out, you forfeit the tax benefits.

If you live for long enough - very long enough - the annuity could still be a winner despite the loss of the tax advantage. But the odds are against it (that's how insurance works), the odds are even more against it if you've forfeited the tax benefits, and purchase life annuities are very very niche for a reason.

AnotherJoe

lisyloo wrote: »

No idea, but they are both mentally capable adults and very much able to make up their own minds. I would think they’d used a solicitor to set it up,


So were plenty of people who went down this route with UWP and similar


There is no issue with IHT (I’d guess value of house is £150k).
Even more pointless then even if it worked for that which it wont


If you are right and deprivation of assets comes in play then I’m quite happy.

Not much you can do when capable adults make decisions for themselves but I will tell them when the occasion arises that I’d rather they had comfortable care.

Yep that's about all you can do, they are probably quite happy at the moment in blissful ignorance, the odds are they wont need it, and if they do it will be when the second one goes into care (at which point most likely they wont know whats going on*) , if they do, since the home cannot be sold when the first goes into care.
What they could have done which will work is go to tenants in common and then each leave half to the children with a life interest for the survivor. My mum did that. As it happened dad went into care first and mum didnt need it but no harm done.

Of course any decent children will not want that and would rather spend the money on a good care home, though round here, the £75k you are looking at wouldn't pay for much more than a years stay.


* which reminds me, have you set up POA for them? Especially with 5 siblings best to get it clear who is in charge

lisyloo

AnotherJoe wrote: »

Of course any decent children will not want that and would rather spend the money on a good care home, though round here, the £75k you are looking at wouldn't pay for much more than a years stay.

My MILs fees are £925 but after SP, AA, interest, the bill is closer to £30k per annum.

Most people don’t stay that long although it varies.
I’ve seen people in and out of the care home within a matter of days.
My FIL spent 11 days.

I agree about decent children but time and time again you see greed over money when someone dies unfortunately.

which reminds me, have you set up POA for them? Especially with 5 siblings best to get it clear who is in charge

I do need to check this.
It’s important that they have a POA and I think younger replacement attorneys (than each other).

nigelbb

lisyloo wrote: »

My MILs fees are £925 but after SP, AA, interest, the bill is closer to £30k per annum.

Most people don’t stay that long although it varies.
I’ve seen people in and out of the care home within a matter of days.
My FIL spent 11 days.

The average length of stay for a care home resident is about 30 months.

AnotherJoe

lisyloo wrote: »

My MILs fees are £925 but after SP, AA, interest, the bill is closer to £30k per annum.


Round here (SE ENgland) its generally £1200-£1500 a week.


Most people don’t stay that long although it varies.
I’ve seen people in and out of the care home within a matter of days.
My FIL spent 11 days.
My mum 6 weeks. And that was for the best.


I agree about decent children but time and time again you see greed over money when someone dies unfortunately.
Yep

I do need to check this.
It’s important that they have a POA and I think younger replacement attorneys (than each other).

Also will avoid a squabble about "well mum would have wanted such-and-such" when its clear in her POA what she wanted and who she entrusted to enforce that.
Good luck.

Shedman

nigelbb wrote: »

The average length of stay for a care home resident is about 30 months.

Which like most statistics is fairly meaningless (and I think the figure is actually 26 months taken on a simplistic mean average). However those who go into care homes and are funded by a LA are likely to be at the lower end of the spectrum of time in a care home, which is self evident as the LA will resist putting people in care homes until as late as possible, and are likely to be those in in the worse state of health and hence skew the averages.

Self funders (generally ABC social class) have a much longer average stay and a much longer tail on the distribution curve (a not insignificant percentage staying 7+ years). Long term care annuities help protect against these outliers .. yes no doubt the insurance companies win overall but do you want to be the one topping up your relatives care home fees or putting them in overmydeadbody grove when the money runs out.

xylophone

Relative's relative was 91 with heart problems when she went into a residential home (progressing to care home then nursing home) and a little over 97 when she died - nearly six years.

There were a number of residents in the residential home who were well into their nineties and a couple of centenarians - in the care home one of the residents reached 100 while she was there.

At a rough estimate over £300,000 in fees even after taking into account AA and (for the last year), the nursing care component.

Relative did have PoA and is now executor - he says the estate is more (much more) than repaying the AA received through the IHT it is now having to meet!

lisyloo

Shedman wrote: »

yes no doubt the insurance companies win overall but do you want to be the one topping up your relatives care home fees or putting them in overmydeadbody grove when the money runs out.

I agree with you that an annuity is there to protect the person not having to move if they live a long time. This is a bad situation for anyone but particularly for dementia sufferers who benefit from familiar surroundings and people.

Unfortunately my family were all really unhappy that the annuity did not actually provide a guarantee.
I.e. over this long period of time the fees could exceed the annuity even if you build in an increase.
In our case (my MIL) there isn’t enough money to keep buying top-up annuities or paying top-up fees.
So for us an annuity did not provide the answer we wanted I.e. a guarantee. She could still run out of money !
As an aside my in-laws both bough funeral insurances 20 years ago and the amounts are about 50% of what is required, so forecasts can become way out over long periods. Yes funeral costs have risen but so will care fees.

My MIL was originally in the same home LA funded (before her husband died). She is low maintenance (other residents constantly complain, wander or cry out etc.) so we are hoping that should she outlive her money (not expected by any of us) that the home will want to keep her rather than have a void and take on another client who is an unknown quantity.
We feel it’s unlikely she’d have to move. A risk yes, but so is an annuity over a long period unfortunately.

lisyloo

xylophone wrote: »

There were a number of residents in the residential home who were well into their nineties and a couple of centenarians - in the care home one of the residents reached 100 while she was there.

There were almost certainly some short stayers too, probably some who only stayed days.

The average is not particularly helpful.

I agree with Sherman that the LA will only move people as late as possible for economic reasons.

The only thing I’d add is that people in residential homes are kept hygienic, well fed, well hydrated and medically attended which maximises longevity.
My MIL is 91 and has had no colds in 2 years. If they think she might have a UTI then she is checked by a nurse straight away.

AnotherJoe

xylophone wrote: »

There were a number of residents in the residential home who were well into their nineties and a couple of centenarians - in the care home one of the residents reached 100 while she was there.

Sampling bias. For every 97 and 100 year old there, by definition you dont see the 99 that only laster a short time after booking in.



My thought is that since for pretty much everyone its impossible to cater for the "lived to age 100 the last 20 in a NH paying £70k a year scenario', and if you did make an effort to cater for that you'd totally mess up your life living in penury to save for that outlier, its not worth trying to cater for it, your home should be the savings of last resort because after all you wont need that.