Paying for care options

Nova01

Hi all,
Long new post so please bear with me.
My Grandmother, who is in her early nineties, is seriously considering going into a residential care home.
She has also received inheritance from a late relative so there is no immediate or near future issue in paying for care, the best care home we have looked at is around £36k per year.
I have seen immediate care annuities, I believe there are only four providers of these.
I have also been advised that a kind of life insurance can be added to them.
I have been in touch with a few SOLLA's and they charge on average £2k to arrange the annuity.
The inheritance when finalised will be around £350k, if the my grandmother's property is sold, there will be an additional amount to that.
I did ask the SOLLA'S to also consider other options, such as interest from a savings account.
I am aware that in the future interest rates may go down.
There is a lot to digest with this, has anyone else had experience of this?
Thanks

SVaz

Does someone have LPA for her finances?
How much pension income does she have?
£36K a year seems fairly cheap for a care home,  even without nursing or specialist care. 
At her age, I’d be of a mind just to invest most of the inheritance in fixed rates and use it that way rather than a care annuity.  

Nova01

Hi,
LPA has been arranged, but not activated if you get what I mean.
Pension is around £215 per week, plus Attendance Allowance.
Yes, I also think that £36k per annum is very good especially in comparison with other homes, and as previously noted, the home is very good.

Keep_pedalling

Have to agree that is sounds very cheap for a care home unless we are talking about topping up income shortfall.  For someone who is making this decision because they are getting frail but are otherwise healthy they could be looking at a very long stay so an annuity maybe a good option. 

af1963

£36K ( about £700/w) seems cheap to the point that I'd double check it.  (For comparison, I know of a relative in a mid-price local nursing home paying £1500/w.)  Nursing homes are more costly than care homes, but even allowing for that it seems low.  Worth making sure that is the actual rate charged to 'self-payers' and not the lower rate that local councils pay.  Or the *extra* amount required on top of her existing pension.

Also consider that even if it's a correct price it will increase if her needs increase and she needs nursing care in future. So you might want to plan to keep some of her cash still available if that happens.

Any annuity is a gamble on life expectancy - it provides some certainty in the case of living for a long time.

GrubbyGirl_2

If she is in her early 90's, and I don't wish to sound heartless, the reality is she is unlikely to live another decade and probably a lot less.  If she has been in a care for for a few years and her money has become depleted then costs would be picked up by the local authority and they would be delighted at those costs.  What people don't seem to realise is the fact that social services cannot simply move someone from a more expensive care home to a cheaper one as that would be a breach of article 8 of the Human Rights Act.  Having said that they do it all the time but that's because people don't know their rights or don't have anyway to fight for them.  I worked in NHS Continuing Healthcare for the last 15 years before I retired.

Taking her pension into account she will be paying around £25k a year.  even at a higher price it will take a good few years for her inheritance to be used up let alone adding money from her own property.  I really think an annuity will not be good value for her.  get the best return on her money and pay for care directly

Nova01

Thanks for the replies so far.
I am fully aware that nursing care may be needed in the future, it may be something that could be covered by NHS funding, depending if course on what the condition may be.
The reason for preferring residential home care as opposed to visits by carers through the day at home is because someone is available 24/7 rather than four visits of around twenty minutes a day.
We obviously hope that my grandmother is around for many more years, which obviously affects the decision.
A quick look at the basic online calculator shows a price of around £75000 for the annuity, that obviously doesn't include any add-ons like the life insurance.
I do not know how much the life insurance will be or if there are any calculators.

elouise01582

Immediate care annuities are all fully underwritten so unsure as to where you are getting the £75,000 figure from and you can look to include capital protection if your grandmother sadly does not live long enough to get the purchase price paid back in care home fees.  Do ask your SOLLA adviser about this.

Nova01

Hi,
I obtained the calculations from the elder care group website (can't post links yet)
I don't know how accurate it is.
As I previously posted I have been in touch with a few SOLLA'S, and around £2000 seems to be the price for them to arrange, is this about right?
Thanks

OldMusicGuy

We were charged 1,500 + VAT to set up an immediate care needs annuity for my FiL. IMO they are a great idea, don't forget they are tax free (provided the money is paid direct to a care provider). Unless your grandmother is comfortable with the ups and downs of investing, I would not consider anything else. This gives them security for life and that is far more valuable IMO than maybe being able to (possibly) get better returns by investing. My FiL is not confident about investing and would not want to pursue this path.

We also found it was very difficult to set up new accounts for things like ISAs for my FiL because he didn't have a valid passport or driving licence (he is 96), so proof of id was near impossible. So unless your grandmother already has investments set up, you might find it difficult to actually invest her money even if you have PofA.

Nova01

Yes, that is a good point about ID for opening new accounts, pretty much an identical situation.
I did look at the tax free status of the annuity and from what I can see, it is one of the advantages of them.
One of the previous posts mentioned value for money and standard investments like high interest savings accounts and Cash ISA's, the concern about these is what happens with future savings rates if the BOE rate gets cut.