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CertLTCP > Topic 6 - ISAs and pensions > Flashcards

Topic 6 - ISAs and pensions Flashcards

1
Q

A straightforward approach to long-term care planning is to build up a portfolio of

A

Investments

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2
Q

What is the main pro and con of building a portfolio of investments as a LTC solution?

A

Pro - can be used whether LTC required or not
Con - all the risks associated with relying on investments and the potential tax issues

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3
Q

Some investments, such as Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) allow for IHT free investments if held for

A

2 years

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4
Q

An additional permitted subscription applies to an individual’s xxx (1) allowance after their partner dies, or they can inherit their xxx (2) entirely. Deaths after xxx gave an additional permitted subscription (extra allowance) and deaths after xxx mean the widow inherits the ISA entirely.

A

(1 & 2) ISA
2 December 2014
6 April 2018

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5
Q

Types of risk carried through investments

A
  • Inflation risk
  • Interest rate risk
  • Capital risk
  • Investor’s risk profile must be assessed to ensure they are line with their beliefs
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6
Q

Huge tax advantages on pensions, on contributions in as well as the pension generally xxx when assessing the estate.

A

sit outside of the estate

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7
Q

Health Cash Plans

A
  • Health cash plans are simple plans that pay a set rate per night in hospital.
  • It does not cover all costs and is designed to cover extra costs that arise from staying in hospital.
  • Set rate varies between plans and providers.
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8
Q

Limits on health cash plans

A

Total amount paid is usually subject to an upper limit per year and cannot make claims for more than 14 or 28 nights in the year for example.

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9
Q

What happens with health cash plans in couples

A

Enhanced benefits available if both partners are in hospital at the same time.

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10
Q

Private medical insurance is a xxx plan and a contract which has defined policy xxx.

A

pure protection
limitations

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11
Q

PMI covers the cost of

A

medical treatment and any other specified support

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12
Q

PMI works in conjunction with xxx, claim started by getting xxx

A

what the NHS can offer
referral from their GP

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13
Q

How are PMI products usually set up

A

In a group or employer’s scheme, but can be set up on an individual or family basis

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14
Q

Perks of PMI

A
  • Avoid NHS waiting lists
  • choice over where treatment takes place
  • usually includes reimbursement of charges (in and outpatient) and surgical and medical fees
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15
Q

In what circumstance does PMI offer a daily income payment

A

if overnight stay in the NHS happens - much like a health cash plan

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16
Q

How much benefit can a PMI policy provide and what information is there around excess

A

Some plans offer full reimbursement straight to healthcare providers, others have upper limit on how much can be claimed in one year. May also be a policy excess.

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17
Q

The market for prefunded insurances (pure protection and LTCI investment bonds etc.) ceased years ago. Typically now, only xxx are sold in the UK. Even though no new policies are being sold, many older policies are still in force today.

A

immediate needs policies

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18
Q

PMI plans are made to meet

A

short-term acute medical needs and not long-term conditions.

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19
Q

FSCS Cover - Insurance & Annuities

A

100% unless firm failed before 3rd July 2015

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20
Q

FOS Compensation

A
  • £430k for complaints referred on or after 1st April 2024 about acts or omissions by firms on or after 1st April 2019
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21
Q

Prefunded LTCI pays out a xxx if the policyholder needs LTC. Aimed at xxx year olds. There is no investment content as these are xxx

A

guaranteed sum
50-75
pure protection insurance policies

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22
Q

Prefunded LTCI policies can be paid for by regular or single premiums. Premiums vary by:

A
  • Age
  • Health status
  • Level of benefit
  • Gender (for existing policies only) – traditionally, LTCI premiums were higher for women than men as they have higher life expectancy.
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23
Q

The EU Gender Directive (21 December 2012) said that

A

gender cannot determine premiums going forward.

24
Q

Single premium prefunded policies can often be topped up later on. How do regular premium policies work?

A

With regular premium policies, a level of benefit is chosen and premiums are worked out from there. Premiums tend to be guaranteed for a little while, then they may be reviewed. Once the insured gets to 70, reviews much more frequent.

25
Q

Other benefits that prefunded LTCI policies may have:

A
  • Repaid costs to a fixed amount for each week of care received at home or in a care home
  • Advice on all aspects of care needs
  • Home adaptation help
  • Assistive devices
  • Home maintenance
  • Access to care counsellors and consultants
  • Home help
  • Adult day care
  • Respite care
26
Q

Originally all prefunded policy benefits paid straight to the provider to

A

avoid taxation, but now can be paid to claimant

27
Q

Benefits are payable in prefunded policies based on their degree of disability, more specifically, xxx. They may also be paid on xxx

A

how many ADLs they are unable to perform.
cognitive or mental impairment

28
Q

Prefunded LTCI policies

Benefit periods usually xxx, maybe a cap on xxx

A

unlimited
maximum benefit per annum

29
Q

Benefits from a prefunded LTCI policy paid after a

A

Deferred period

30
Q

In the past, underwriting of older lives only used xxx. Currently, any insurance relating to disability ceases by latest xxx. With LTCI, underwriters must consider the likelihood of someone becoming xxx as this is more prevalent with LTCI.

A

life expectancy (mortality risk) for IHT purposes
retirement age
disabled (morbidity risk)

31
Q

Typical ADLs might be:

A
  • Washing
  • Dressing
  • Feeding
  • Toileting
  • Transferring (in and out of bed)
  • Continence
  • Mobility
32
Q

The Association of British Insurers has xxx and most insurers are happy to apply these.

A

standard definitions for the various ADLs

33
Q

The more ADLs that cannot be performed,

A

the greater amount of care required, thus the highest level of benefit required.

34
Q

It is common for insurers to required that x or x of the ADLs cannot be completed before a claim can be made.

A

2 or 3

35
Q

xxx is one of the biggest reasons for making claims

A

Cognitive impairment

36
Q

MCI is when people have cognitive issues, but does not really interfere with every day life. MCI involves problems with one or more of these thinking skills:

A
  • Memory or learning
  • Reasoning
  • Attention
  • Language
  • Loss of interest or motivation
37
Q

What does MCI stand for

A

Mild cognitive impairment

38
Q

Two tests are used in the assessment of mental cognition

A

mini mental state examination and delayed word recall.

39
Q

Mini mental state examination tests:

A
  • Orientation – e.g. which town are we in
  • Memory – repeat the name of 3 objects
  • Attention and calculation – spell a word backwards
  • Recall – recall the objects from the memory test
  • Use of language
40
Q

Only xxx cognitive impairment is covered by LTCI (dementia) and xxx not covered (depression).

A

organic
non-organic

41
Q

There are various disabilities and influences that may affect an older person’s standard of life including

4 I’s

A
  • Immobility
  • Instability
  • Incontinence
  • Intellectual impairment
42
Q

The medical conditions which most commonly occur in people requiring LTC are:

A
  • Dementia
  • Alzheimer’s
  • Stroke
  • Heart disease & heart failure
  • Cancer
  • Diabetes
  • Arthritis (common complaint, but not life threatening)
43
Q

The xxx Act 1988 gives people the right to see their medical records produced by anyone in the medical industry. Also covers disability and death claim reports.

A

Access to Medical Reports

44
Q

The Access to Medical Reports Act 1988

Individual may consent to the report’s xxx

A

release, refuse, request sight and also request for things to be amended if they deem it to be incorrect.

44
Q
A
45
Q

What happens if an individual requests an amendment on a medical report bu the doctor disagrees

A

If the medical attendant disagrees with any amendment, they must include a statement explaining that the individual has expressed reservations about the report before issuing it.

46
Q

If an individual wishes to see a report before it gets sent to insurer, doctor must hold report for xxx. . If the individual wishes to see the report after issuing, can be done for xxx since making of report.

A

21 days before issue
6 months

47
Q

The Access to Health Records Act 1990 allows access to individual’s health records and the right to amend if incorrect. This Act expands on the 1988 Act as it refers to ‘health professionals’ as opposed to ‘medical practitioners’ which includes:

A
  • GPs
  • Those employed by health authorities
  • Dentists
  • Opticians
  • Physiotherapists
  • Psychologists etc.
48
Q

Many LTC bonds involve lump sum investment into a bond combined with a xxx. Invests in one or a number of xxx. Units cashed in regularly to pay the premiums of the policy.

A

regular premium LTCI policy.
unit-linked funds offered by a life company

49
Q

LTC Bonds

Level and nature of benefits typically maintained for life, as long as xxx this usually ends up with benefits not guaranteed and depend on investment returns.

A

specified rate of return is achieved by the investments

50
Q

Most LTC bonds assume an annual growth rate of xxx enough to protect capiatl and pay LTCI policy.

A

7%

51
Q

The main risk with long term care bonds is that if there is a

A

dip in the value of the fund at the time that care is needed, there may be little or no money to pay for care.

52
Q

A lifetime care asset protection bond is similar to a LTC bond and consists of

A

2 insurance contracts and the investment is divided between the two at the outset. One provides guaranteed LTCI benefits, while the other aims to return the whole of the investment to the beneficiary.

53
Q

Immediate needs cover - format

A

Often, but not always, in the form of an impaired life annuity.

54
Q

Immediate LTCI products provide income for a lifetime, to qualify you should:

A
  • Already be in care home
  • About to go in a care home
  • Receive domiciliary care
55
Q

Tax on immediate needs cover

A

If benefits paid straight to the client, payment comprised of both capital and income. In this instance, income is taxable, and capital is tax-free. Income is already paid net of basic rate income tax, so can be reclaimed if nil rate taxpayer or more owed if higher rate taxpayer.

If benefits are paid directly to care home, they are tax free.

56
Q

Deferred care plans

A

For people who cannot afford immediate LTCI. Self-funding until they think/wish to get funding help when the time comes. If the insured dies within he deferred period, no money is paid out. Deferred care plan may offer a range of deferred periods, from one to five years, and you may be able to increase the benefits if necessary.

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