Immediate Needs Care Annuity - where to find and how to choose a provider?

Sportacus

Thanks, my mother's house would probably sell for £1M, so let's say that returns £5000 a month gross that's needed to pay the care home, after income tax that might only be £3000 a month and so not enough to pay the care home. If care home payments could be paid by gross income, then she would have enough, but from what I can see they can't be. But for some reason if you have a care annuity the fees are paid to the care home tax free.

Imagine if you were retiring and could get an annuity that would pay you £5000 tax free each month, but if you went the drawdown route and took £5000 a month and got taxed on it. You'd think our government was in cahoots with the annuity providers.

xylophone

Presumably your mother has existing pension (s) income? Other income?

Will she qualify  for (or does she already receive) Attendance Allowance?

Will she qualify for the nursing care component?

This will cover part of her fees.

When the house sells, presumably you will ensure that it is deposited in interest paying accounts.

Incidentally, if she doesn't already complete a self assessment return she will need to do so.

It is a case of working out whether she will go the INCA route or whether she will pay the fees from income and some capital.

Does this help at all?

https://www.eldercaregroup.co.uk/care-fees-annuity-calculator

Shedman

We used Eldercare Group to arrange an INCA for the MiL in 2018.  We were very satisfied with their service and they provided clear and helpful advice with no 'hard' sell and were happy to talk us through all the various options without any commitment.  There are I believe only 3 providers of INCAs (were only 2 when we looking JUST and Aviva but we were told a 3rd was thinking of providing them) hence much of the ability to get a good premium is down to the advisors clout/negotiations with the providers.  

Ibrahim5

When I looked into it, it became obvious that it's a statistical game that not many people want to play. I think the average stay in a care home is about 18 months. They wanted 7 years of fees for the annuity. If they lived over 7 years you would win, if less you would lose. With an average of 18 months you are almost certain to lose. My relative lasted 12 months.

wjr4

Sportacus said:

Thanks, my mother's house would probably sell for £1M, so let's say that returns £5000 a month gross that's needed to pay the care home, after income tax that might only be £3000 a month and so not enough to pay the care home. If care home payments could be paid by gross income, then she would have enough, but from what I can see they can't be. But for some reason if you have a care annuity the fees are paid to the care home tax free.

Imagine if you were retiring and could get an annuity that would pay you £5000 tax free each month, but if you went the drawdown route and took £5000 a month and got taxed on it. You'd think our government was in cahoots with the annuity providers.

I mean,… she has £1mil, it’s not like she’s going to struggle? Also, anything above that would be subject to IHT so she’s saving 40% IHT with any payment to the care home which is above this threshold.