Care home fee annuity versus pension annuity?

Organista

Marcon said:

Organista said:

Marcon said:

Organista said:

Talking to someone who is thinking of buying a care home fee annuity for an elderly relative using the proceeds from the sale of his previous residence, I am left puzzled as to the difference between a care home fee annuity and any other annuity such as that from a pension.  Why are there apparently only 4 providers of care home fee annuities whereas there are lots for pension annuities. 

Thanks for any explanation. 

They're different products and potential annuity providers have different appetites/capacity for each.

But surely it doesn't matter what the money is for.  All that matters to the provider is how long they will have to pay it for, isn't it?

No, because the markets are different - the main difference being that care home fee annuities are bought with 'non pension' money whereas pension annuities are, as the name suggests, bought with funds coming directly from pension savings.

But is that any different from an annuity bought with non-pension savings that I might choose to buy to pay for my golf club fees, for example?

starving_artist

westv said:

There aren't lots of providers for  annuities. There are only around 6 or so.

Out of interest, who are they?

Andy_L

Organista said:

Marcon said:

Organista said:

Marcon said:

Organista said:

Talking to someone who is thinking of buying a care home fee annuity for an elderly relative using the proceeds from the sale of his previous residence, I am left puzzled as to the difference between a care home fee annuity and any other annuity such as that from a pension.  Why are there apparently only 4 providers of care home fee annuities whereas there are lots for pension annuities. 

Thanks for any explanation. 

They're different products and potential annuity providers have different appetites/capacity for each.

But surely it doesn't matter what the money is for.  All that matters to the provider is how long they will have to pay it for, isn't it?

No, because the markets are different - the main difference being that care home fee annuities are bought with 'non pension' money whereas pension annuities are, as the name suggests, bought with funds coming directly from pension savings.

But is that any different from an annuity bought with non-pension savings that I might choose to buy to pay for my golf club fees, for example?

I think a care home fee annuity is set to pay the care home fees, regardless of how much they go up in the future.
While your savings funded annuity will only pay the sum agreed so if the golf club fees go up by more than the agreed rate of indexation you would have to fund the shortfall

Marcon

Organista said:

Marcon said:

Organista said:

Marcon said:

Organista said:

Talking to someone who is thinking of buying a care home fee annuity for an elderly relative using the proceeds from the sale of his previous residence, I am left puzzled as to the difference between a care home fee annuity and any other annuity such as that from a pension.  Why are there apparently only 4 providers of care home fee annuities whereas there are lots for pension annuities. 

Thanks for any explanation. 

They're different products and potential annuity providers have different appetites/capacity for each.

But surely it doesn't matter what the money is for.  All that matters to the provider is how long they will have to pay it for, isn't it?

No, because the markets are different - the main difference being that care home fee annuities are bought with 'non pension' money whereas pension annuities are, as the name suggests, bought with funds coming directly from pension savings.

But is that any different from an annuity bought with non-pension savings that I might choose to buy to pay for my golf club fees, for example?

Completely different from a marketing standpoint.

squirrelpie

There are several good hits if you search for 'care home annuity', including:

https://www.payingforcare.org/buy-a-care-annuity/

https://www.moneyhelper.org.uk/en/family-and-care/long-term-care/immediate-needs-annuity
These mention how you *might* be able to link one to actual care home costs.

af1963

Care annuities are a more complex product - they depend very strongly on the medical details of the individual. (While some pension annuities pay out more based on health factors, for many people they are still comparatively straightforward and based on age as the main factor.)

When considering care annuities in the past for a relative, I would have liked some kind of 'ball-park' estimates of what it would cost - £100K, £200K, £300K, £400K  - before spending the fairly substantial time and effort to get all the medical information needed to get full quotes - but couldn't find anywhere that would do any kind of estimate at all without the full medical info. The numbers sold are presumably so small they can't even provide rough numbers based on "when we sold similar products to other 90 year old men, the costs ranged from X to Y"

westv

starving_artist said:

westv said:

There aren't lots of providers for  annuities. There are only around 6 or so.

Out of interest, who are they?

Just off the top of my head:-

Just
Scottish Widows
Aviva
LV
Legal & General
Canada Life

FIREDreamer

westv said:

starving_artist said:

westv said:

There aren't lots of providers for  annuities. There are only around 6 or so.

Out of interest, who are they?

Just off the top of my head:-

Just
Scottish Widows
Aviva
LV
Legal & General
Canada Life

And Standard Life

Organista

af1963 said:

Care annuities are a more complex product - they depend very strongly on the medical details of the individual. (While some pension annuities pay out more based on health factors, for many people they are still comparatively straightforward and based on age as the main factor.)

When considering care annuities in the past for a relative, I would have liked some kind of 'ball-park' estimates of what it would cost - £100K, £200K, £300K, £400K  - before spending the fairly substantial time and effort to get all the medical information needed to get full quotes - but couldn't find anywhere that would do any kind of estimate at all without the full medical info. The numbers sold are presumably so small they can't even provide rough numbers based on "when we sold similar products to other 90 year old men, the costs ranged from X to Y"

I found site that would give an idea of the return at https://comparison.moneyhelper.org.uk/en/guaranteed-income-for-life/your-details.  Yes, it does ask for all the medical details but you'll get a rough idea by guessing those, even if they aren't accurate.  When I tried it, the results were fascinating, to say the least.  While 3 of the providers gave similar figures, one (Just) came out with a return that was over ten times higher!!!  That seemed like a mistake which wouldn't turn out to be true if we applied for formal quotes, but we're in the process of doing so, so we shall see.

squirrelpie

FWIW I just tried the moneyhelper questionnaire and got 6 quotes, all fairly similar. I'm in fairly good health at the moment though, so I'll keep the link for now. Thanks for posting it.