Chapter 5

Question 1

What’s a key advantage of someone purchasing a deferred care plan vs an immediate need annuity?

Answer 1

The lump sum required to provide a given level of income would be significantly less than that required for an immediate needs annuity

Question 2

If an immediate need annuity is used to pay for informal care in an individuals own home, the payments to a higher rate tax payer would be liable to:

Answer 2

An additional 20% tax on the interest element

Question 3

If a pre funded LTCI plan pays out benefits, how do these payments relate to the actual cost of care?

Answer 3

There is no link and the costs of care may not be met

Question 4

What is the typical deferred period for a convertible LTCI plan?

Answer 4

Thirteen weeks

Question 5

What is a risk based LTCI?

Answer 5

A regular premium LTCI product that will pay a pre-determined level of benefit if a claim is accepted. If there is no claim there is no monetary value.

Question 6

How are payments to a registered care provider from a LTCI provider treated for tax purposes?

Answer 6

They are tax free

Question 7

When a home reversion plan is arranged what happens…

Answer 7

Part of or all of the home is sold