Care annuity

[GardenersDelight]

Hi following a stroke my mum was deemed to have lost capacity. So after 8 weeks in hospital she moved into a care home last week
Luckily my brother and I both have lasting power of attorney and are now looking into buying a care annuity and wondered if anyone has any experience of them
Thanks

I sometimes purchase them for clients if an IFA advises that doing so would be in the client's best interests.
I'm not sure what you need to know, but iirc we typically have to provide life expectancy/medical information.
It's only worthwhile for a very small proportion of my clients (the majority simply spend their income and capital.)

It seems like it wouldn't make sense unless someone is generally well at the time they are bought and you're expecting them to need many years of care. Otherwise the premium might be too high compared to the annual payments.
If anyone with more knowledge can recommend how to assess the cost vs benefits I'd be interested to learn more

Not appropriate for your mum
What funds/equity does she have
The LA will pay one it gets to a critical point-has she been assessed?

https://www.moneyhelper.org.uk/en/family-and-care/long-term-care/immediate-needs-annuity

This is a reliable source of information on immediate needs annuities (aka care annuities)

There's almost no info in the OP about the mum's circumstances, so what is your reason for saying it's not appropriate?

For us my aunt had to live 5 years before it would break even. She lived 5 years and 2 months. We also managed to have a no increase clause for 5 years which was helpful and saved a good few thousand.

Thanks for replies
Shes 83 in March has survived breast cancer 5 years ago, become frail over last few years has degenerative spinal condition
Assets are approx 260k savings 300k in her bungalow and 21k pension
We just are so unsure about long term prognosis and are paying £1300 a week

As with all annuities it's a gamble. You are betting against the actuaries that your DM will live long enough that the annuity pays out more than it cost. The actuaries normally win, so have a good think before committing.

I bought a large annuity for my DF as he comes from a very long-lived family. It paid off years ago (he's now 96)... and he still has the bulk of his capital. But most people lose that bet, otherwise the companies wouldn't offer them...

I'm afraid it really does depend on the prognosis. Not an easy decision to make, either way. Good luck, OP.

You can get a quote or two and think about it.

I know that my brother got one for my mum but not to the full amount of her care home fees as she had money still coming in from pensions/savjngs/attendance allowance. The price will depend on individual age/health information.

It is a bit of a gamble but whilst it is true that the state will pay for care if your relative runs out of savings, they are unlikely to pay the full price of one of the nicer care homes .

Her age and that she has enough in savings to fund care for many years. She may not need care or if she does it may be LA funded and so the annuity would be a waste.

@Ametora none of that info was provided before you made you post. And she's already receiving care.

And also, none of that rules out an annuity. She may not want LA funded care. She may prefer a fixed upfront cost - and therefore certainty about what will happen - rather than running down savings by an unknown amount.

not to the full amount of her care home fees as she had money still coming in from pensions/savjngs/attendance allowance

That's what providers usually recommend. An annuity to cover the difference between income and fees.

Are you an annuity salesperson?

The 1st point said 83 and just gone in to care and that she had enough Monet to buy an annuity- all of that indicates that one is unlikely to be a good option

Most people only live about 3 years following moving to a care home. Almost certainly not worth the gamble. I think you will find only your mums assets are taken into account when working out the finances so half of anything in joint names, everything in her name and nothing in anyone else's name. You will need to check though. My DM had a devastating stroke but did improve but died after 3 years of another stroke.

The 1st point said 83

It doesn't. Its right there at the top of the thread if you want to check.

No, I have no vested interest. We looked into one for my dad and decided against, but they are suitable for some people so ruling them out based on no information whatsoever is bad advice. It's for the OP to weigh up pros and cons - which means discussing both sides.

Thanks for a the responses
I'm going to do initial forms with annuity advisor then with my brother were going to have to make a decision
I'm just so peeved that after all my dad's hard work this money is just going to disappear!

Honestly it won't
She will probably not need care for long- have you had a social care assessment? They may well pick up the cost or part of it.

You seem to be heading down one route without being logical.

The money wouldn't just disappear, it would be being used to buy quality care and security for your mother. Perhaps that's one of the things that your dad worked so hard to save for.

It’s not going to disappear, it’s going to be used to pay for her necessary care.
Have you considered applying for continuing healthcare funding? If she has complex nursing needs she may qualify. Having gone through this for my stepfather I would advise using a professional firm to help with the application, it could be money well spent.
She has plenty of equity to pay for care for a long time. If she’s self funding, she will also be eligible for attendance allowance, which is £101 per week. Add this to her pension and this will pay for 20 weeks’ care per year, so in reality she will be paying for the additional 32 weeks, which equates to about 13 years worth of fees. That’s without having her money invested wisely - half a million is going to gather a LOT of interest.

By disappear do you mean it won’t be available for you to inherit? From what I can see it’s being put to good use, it’s paying for care for your mum. Surely that’s more important than leaving it behind? They probably saved he’d to make sure they had enough for that eventuality.

If your Mum is deemed to have lost capacity and therefore has primary care needs, has she be assessed to see if she is entitled to Continuing Health Care Funding?

It is notoriously difficult to get, but only because they make it so. CHC has a limited budget but it doesn't mean to say she isn't entitled to it, it can just be stressful going through the process.

We used an Elder Care consultant to help us with CHC and she was amazing. Also, we spoke to Beacon which an NHS-funded help line that can answer questions as to whether CHC funding is an option.

https://beaconchc.co.uk/

Good luck, it is a very trying time.

OP just be wary of people shouting CHC at you, it really is just for a few % of the most complex patients. If Mum is in a care home not a nursing home then she absolutely isn't CHC.
I'd price up the policy, but it likely isn't worth having.

But it's not. It's paying for 24/7 on call care. For food, for heating, lighting, building maintenance, gardening, insurance, taxes, staff training and uniform, laundry, etc etc etc. £7.70 an hour is pretty good going. I paid more than that in nursery fees over twenty years ago.
It's what we save for all our lives. To buy in help and care as needed.
Or would you have a better use for it at this stage in her life?

But it will probably be bale to be claimed at some point- so you need to factor that into costs

I have to say that no-one I know has had an issue getting it- in many parts of the country. Just need to be persistent and get everything in place.