Care home annuities

LHW99

Thanks Marcon, however if everyone who knows ignores that contributor (or others), new posters who have only just arrived may not understand where there is a bias, or disinformation, as there may not be the opportunity for experienced posters like yourself, xylophone, dunstonh and others to present a better view.

Nickvale

Thanks for the help all, I've applied to a couple of IFAs to get quotes. Neither charge up front, both apply to the same insurance companies using the same forms with their headers on them, one will want a flat fee, the other a percentage of the eventual lump sum. Will be interesting to to compare once the quotes come through, they reckoned 10 -12 weeks.  

saucer

Nickvale said:

Hi - 
My mum's 95, got dementia and has been in a care home for some years now. She's self-funding but at over £2000 per week she's getting through her savings very quickly. She's physically in pretty good shape so the family is a bit concerned she'll outlive her savings.
We've heard that you can buy Care home annuities, which for a lump sum, would pay the care home fees for the rest of her life. Looking on-line for details seems a bit of a minefield though, with a lot of providers and brokers giving differing 'estimates' of the potential one-off cost. Some seem to require fees for looking for the best deals as well, and there doesn't seem to be any sort of regulated market. As there's a lot of cash at stake (six-figure sums) I was wondering if anyone out there has looked into Care home annuities and if so do they have recommendations as to the best and safest way to compare providers?
Many thanks - Nick 

In our case that’s exactly what happened. Now the longest standing resident (10yrs +) and fit as a fiddle. To their credit the care home accepted LA payment when her own money ran out. Her flat when she passes on will be sold and everything will go to the LA. 

wjr4

Nickvale said:

Thanks for the help all, I've applied to a couple of IFAs to get quotes. Neither charge up front, both apply to the same insurance companies using the same forms with their headers on them, one will want a flat fee, the other a percentage of the eventual lump sum. Will be interesting to to compare once the quotes come through, they reckoned 10 -12 weeks.  

You should know what their initial fees are now, not when you get the quotes?? 

OldMusicGuy

My FiL took out an immediate care needs annuity at age 95 to help fund his care home fees. We worked with a SOLLA adviser and they were very helpful, at no point did they pressure my FiL to take out an annuity. Instead they did a financial review and talked through the pros and cons of an annuity vs paying from savings. There was a fee for that service.

It was incredibly helpful and in the end my FiL and his children decided an annuity was the best approach because it gave them all confidence that he would not either run out of money or reduce his savings so much that there would be no inheritance of any note to pass on. Immediate care needs annuities are also very tax efficient.

He died two years after taking the annuity out so had not "broken even" (this would have been after about 4.5 years). But he really appreciated the security it gave him both in knowing he would not run out of money and also how much he would be leaving his dependents.

I am not a fan of IFAs and would never use one myself for investment or pension advice. However, in this specific circumstance the use of a SOLLA-registered adviser was a really positive experience and I would encourage anyone in a similar situation to consider their use.

Ibrahim5

Taking out an annuity at age 95 with a break even of 99.5 is absolutely bonkers. You were absolutely fleeced and are happy about it! What age did you think they were going to live to?

LHW99

Ibrahim5 said:

Taking out an annuity at age 95 with a break even of 99.5 is absolutely bonkers. You were absolutely fleeced and are happy about it! What age did you think they were going to live to?

When already at 95, he has a 25% chance of living to 99, and better than 16% chance of living to 100

Not bad odds

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

MeteredOut

LHW99 said:

Ibrahim5 said:

Taking out an annuity at age 95 with a break even of 99.5 is absolutely bonkers. You were absolutely fleeced and are happy about it! What age did you think they were going to live to?

When already at 95, he has a 25% chance of living to 99, and better than 16% chance of living to 100

Not bad odds

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Would be interesting to see those stats adjusted for people who live in care homes.

LHW99

MeteredOut said:

LHW99 said:

Ibrahim5 said:

Taking out an annuity at age 95 with a break even of 99.5 is absolutely bonkers. You were absolutely fleeced and are happy about it! What age did you think they were going to live to?

When already at 95, he has a 25% chance of living to 99, and better than 16% chance of living to 100

Not bad odds

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07

Would be interesting to see those stats adjusted for people who live in care homes.

True.

One might argue that those in care homes are more frail, so may have a lower life expectancy.

On the other hand, in a care home they would have regular meals (and other care), and medications given on time, which would tend to prolong survival

Perhaps in the end, the resulting adjustment would be small.

Ibrahim5

Care homes should carry a government warning. They are bad for your health and your wealth. The 'resulting adjustment ' is not small. This is the problem. Statistic professionals fleecing people, helped by IFAs who are skilled at giving everyone a good haircut all in the name of "peace of mind".