Care Fees Annuity - Advisers Commission?

NottinghamKnight

Care home residents are increasing, I'm following the well known guarantee that whatever certain posters say is pretty much certainly wrong. Longer life expectancy is combining with an increase in dementia and similar, people with dementia will typically live several years, my mother died earlier this year after having diagnosed dementia for about seven years. She only spent a few months in a care home but my father is still there, physically fine but with worsening dementa, he has always refused to be tested for diagnosis but he's had signs of dementia for around three years so far.

Shylock

Thanks for all the comments and advice.
With regards to the wisdom, or not, of Care Fees Annuities per se, this is only one avenue I'm exploring.  There is an attraction in knowing exactly how much will be needed for care costs and being able to "ring fence" those funds but as has been pointed out it does look like an expensive luxury.
With regard to my original question concerning the "Advisors" remuneration you are all correct in that it is not a "commission"; its a fee.  But it's specified as a percentage of the cost of the policy, added to the policy premium, collected by the Insurer and paid back by them to the "advisor".  So a commission in all but name.
The "fee" my "advisor" is quoting works out substantially more (based upon the estimated policy cost) than the numbers indicated above for a Pensions Annuity.  I suspect that this would be justified by the fact that, unlike a pensions annuity, they are not able to just consult actuarial tables but have to carry out a personalised individual assessment , consult GP's, obtain medical reports etc..  Although I'm not sure how much of that work is carried out by the "advisor" on behalf of the three Providers who will be quoting and how much they do themselves. The issue is I have nothing to compare it to to check I'm getting value for money and was hoping someone on here may have been through the process and could advise.
Thanks once again for the feedback.  It's been very useful.

fred246

I am pretty sure that our SJP man said that a medical report could be done paid for by the provider. So that would be free for the adviser and the client. So if you go ahead the adviser gets paid a lot of money for doing nothing and the provider gets an enormous lump sum. If you don't go ahead the adviser gets nothing and the provider gets nothing and loses medical report money. So as you can see it's very much like the old commission model. The adviser isn't going to provide advice only encouragement to go ahead. So it's all dependent on the customers state of mind. If you are panicking that they will live for 20 years and you will run out of money they might get a customer.

fred246

Regarding statistics. We have an ageing population but the proportion of people going into care homes is decreasing. Overall the number of people in care homes is a bit less than it was.

LHW99

I wasn't aware SJP was into Immediate care needs annuities. They are definately one of the more expensive advisors, and in other investment areas not independent - you will find threads here about them. You can always try a different adviser.

fred246

Someone on here advised me to get a SOLLA adviser. I thought they were IFAs and got a shock when they turned out to be SJP. This was a while ago. As I said they lasted 12 months in the care home. We would have lost a lot taking it out. I think most people will lose taking out an annuity. A smallish fraction I guess less than 10% would gain.

fred246

I bet the government has considered forcing people to use them. If you had the capital you could tell everyone they have to purchase an annuity to avoid the government having to pay anything. Interesting wondering what would happen if they did that.

Linton

fred246 said:

The numbers of people going into care homes has decreased massively in recent years. It's all down to more care being provided in the community. Basically armies of carers on minimum wage going from house to house making multiple visits a day. Most people with physical problems can be kept at home. If your heart was so bad you couldn't live at home with carers you aren't going to live long.

I would question your statistics about the number of people in care homes decreasing massively in recent years. See  https://www.gov.uk/government/publications/end-of-life-care-profiles-february-2019-data-update/statistical-commentary-end-of-life-care-profiles-february-2019-update where it shows that between 2012 and 2019 the % of over 75's in care homes (as opposed to nursing homes) decreased from just over 11% to about 10%.  But on the other hand the number of over 75's increased.

If you want to go back in history, many of the people now in care homes would have been looked after by their daughters in the family home.  Thanks to social changes this is much less common.

If you decide on care at home, you still have to make arrangements to pay for carers, which in the extreme could be more than the costs of a care home.  Plus of course you cant sell your home to help pay for it.  If you have to rely on  Council provision, the care available can be limited to perhaps 45 mins X 4 times a day.  Barely enough to get the person out of bed, get  breakfast, lunch and tea and then make sure they get to bed.   If it would be cheaper for the person to go into a care home, that is what will happen.  

fred246

We paid for carers for years. They are very cheap in comparison. Only about £10 per hour. They were never given very long visits. Never very satisfactory but MUCH cheaper than a care home.

fred246

Playing with ideas at the time I suggested my housewife wife might like to look after her mother in law and save the family a fortune. It was not well received.