2 Flashcards
Health cash plan
Pay a fixed sum towards the cost of treatment
Self funding care 2 usual main resources used? And considerations should take as an adviser for each?
Investment policies - adviser should consider ATR & growth, income & indexation needs
Existing pension arrangements - adviser should consider options of best way to draw
What should financial planning consider when taking care into account?
Long term affordability
How can you benefit from a discount when self funding care?
Contributing lump sum can get a discount or guarantee fixed price of care for a specific period of time
Immediate needs care plan
Advantages (2)
Disadvantage (2)
Care plan for those that need it immediately.
Annuity purchased with lump sum so the older or iller the person the better the rate offered.
+ benefits paid tax free if go directly to care provider
+ can get capital protection if die soon after taking plan
- benefits treated as anything above capital paid will be taxable as savings allowance if paid to beneficiary
- no scope to alter once in place
How do you qualify for immediate needs care plan?
Fail atleast 1 activity of daily living or have organic impairment e.g. alzhiemers
Pre-Funded insurance policy (3)
- Tax (1)
Pays a regular income when the insured needs continuous care
Applicant sets cover level at outset
No investment content so if no care required then no surrender value
- will be paid to care provider or individual tax free
Deferred care plan (2)
- Tax (1)
Care plan that kicks in after a deferred period e.g. kick in after 5yrs. Usually useful when somebody can self fund for a period of time
No investment aspect so if die during deferred period then doesn’t pay out
- Benefits will be paid tax free to care provider or taxable as savings income if paid to individual
LTC bond
Lump sum investment designed to meet expected LTC costs. Have surrender value and death benefits as 101% of bid value aswell as LTC cover.
When I’m care each month a number of units would be surrendered to cover care costs
Performance monitored to ensure can meet on-going care cost so no guarantee will cover LTC costs in full
Equity release two types
- lifetime mortgage
- Home reversion plan
Lifetime mortgage definition and 3 types
Loan secured on property with min. age 55 with capital raised repayable on death, enter LTC or sell property.
Roll-up mortgage - interest tolls up til death, enter LTC or sell property
Interest only - repay interest only back and repay capital on death, enter LTC or sell property
Home income plan - raise lump sum through lifetime mortgage and purchase annuity
Home reversion plan
Sell all or part of home to a company in return for a lump sum and retain right to live in home, whilst paying ‘peppercorn rent’ til death, enter LTC or move.
Peppercorn rent
Rent payable when sell home under home reversion plan
Who is trading body representing equity release providers?
Safe home income plan standards (SHIPS)
Benefits are contribution tested or needs tested or means tested what’s the difference?
Contribution tested - If made required NI contributions
Means tested - paid if meet analysis of assets and income
Needs tested - If have a level of sickness or disability
