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Julian Gibbs

Many families face the harrowing task of arranging long-term care for a member of their family who requires 24-hour care and attention. This can arise unexpectedly and require an immediate solution.

The Pension Annuity Friendly Society has introduced a scheme that allows the individual to pay a lump sum for pre-determined nursing home costs for life to ensure the impaired person is cared for properly. The nursing home bills are met for the rest of the person&#39s life with immediate effect or after a pre-determined period, in which case the annuity purchase price would be less.

Taking an example of a 65-year-old man suffering from advanced Parkinson&#39s disease, he would need a purchase price of around £107,000 to provide fees of around £24,000 a year paid directly to the nursing home, whereas an ordinary annuity would only provide around £9,600 a year.

Rates vary with different illnesses. Another example is for an 80-year-old woman suffering from advanced senile dementia. The cost of providing £24,000 a year of nursing home fees would only be about £42,000. The Pension Annuity Friendly Society will underwrite most medical conditions that are considered to reduce life expectancy.

Some IFAs are missing out by not recommending impaired-life or lifestyle annuities, which can increase annuity income considerably. Normal life expectancy for a healthy male aged 65 is 15 years. This means around 50 per cent of all 65-year-olds will die within 15 years and, just as relevant, 50 per cent will live longer than 15 years.

Some companies, such as GE Life/Stalwart, offer enhanced lifestyle annuities to smokers without medical examination, while others, such as Pensions Annuity Friendly Society and Britannic Retirement Solutions, offer impaired-life annuities for the seriously ill.

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