View more on these topics

Mum&#39s the word

If IFAs were asked what market sector bought long-term care insurance, many would say it was probably As and Bs and people in their 60s, which would be quite right.

But have many advisers thought about another huge market which they already know and which is made up of existing clients?

This market is A and B clients who are nothing like aged 60 but whose parents are. These are parents who, like many of their generation, do not enjoy the same degree of comfort and affluence as their children.

So, why do these people offer a business opportunity? Well, IFAs may have heard in the recent debate on nursing care or personal care that around two-thirds of all people in care homes are still getting local authority assistance with their care costs.

What does that mean in practical terms? Well, it means that if one of those people needs to go into a care home, he or she will have their costs paid, subject to their contributing almost all their income towards those costs, but they will not be able to choose the home they like.

They will have to restrict their choice to homes which cost no more than the maximum set by their local authority for a person with their particular disability. It inevitably means that there are people who do not get the degree of choice they would like.

Take Brian&#39s situation. His mother Avril is now in her late 70s and lives in North Wales. Brian moved to London with his job many years ago, so he is not going to be on hand if Avril needs practical help.

Avril is so far still in good health. She is independent and still lives on her own. She has regular contact with friends at local pensioner groups and is up to speed with the LTC situation.

She knows her local authority limit for nursing home fees is around £330 a week and that many of the homes in her area charge quite a bit more than that.

While the average cost of a nursing home room in Wales is around £345 a week, nice rooms in lots of homes do cost significantly more.

This is where Brian is able to give his mother some real help. Brian and his wife have more money than Avril – more than she has ever had. Avril has her old-age pension, a very small occupational pension and a bit of savings. She does not think of herself as badly off and she will certainly qualify for local authority help if she ever needs LTC.

But this might mean that if she does need to go into a care home, it is not the home she would choose.

Unless the local authority can be sure that someone else will pay any difference in the fees, Avril will not have a choice of home, which is where Brian comes in.

Avril is almost 77 and her pensions total £95 a week, so she will qualify for local authority help with her care home costs as her savings are just £6,000.

So what Brian has done is to arrange an LTC insurance plan that will pay out a benefit of £50 a week, increasing each year with inflation. This will make up the difference between what the local authority would pay for Avril&#39s care and the cost of the home which she has earmarked if she ever needs LTC.

While Avril will still have to use up her income paying for care costs, the home will be one she has chosen herself. The top-up will make sure of that.

The plan is also sufficiently flexible to pay the top-up even if Avril were to choose to move to a home closer to Brian or one near to her daughter Jane in Yorkshire.

It is a good deal all round. Brian can afford to buy the insurance, which costs a little under £38 a month, and Avril feels much more positive about the future. Even the local authority is happy because if Avril does ever go into a home it will not cost them anything to allow her a much wider choice of home.

You have done some business and a good job for Brian and Avril and when their own time comes, Brian and his wife will surely understand all the benefits of LTC insurance and look to you for advice and help in this area.

Recommended

Morningstar sets up UK net service

US fund ratings and data agency Morningstar launches its service in the UK this week. The service, which is free to both IFAs and direct private investors, provides online data on more than 3,700 unit trusts, Oeics and offshore funds. The website includes portfolio analysis tools, news, fund performance data and quantitative ratings. The site […]

Nationwide snubs multi-ties to stick with its own plans

Nationwide chief executive Brian Davis says the building society will never go multi-tied and sell other company&#39s pro-ducts through its branch network because there is no need to do so. In a clear snub to rival providers, Davis says that as Nationwide&#39s products are “trusted and up to standard”, there is no point having multi-ties […]

IFAs support the AITC &#39its&#39 campaign

We, and, we are sure, most other IFAs, welcomed the good work started in 1999 by Daniel Godfrey, director general of the AITC, in raising awareness of investment trusts among the investing public. The subsequent endorsement by the AITC of the consolidated investment service Transact gave further proof -if anyone needed it – of the […]

Stakeholder around the corner

The Government is introducing a new raft of pension legislation under stakeholder. This will be effective from April 6, when the new stakeholder plans will be launched. All employers with more than five staff on their payroll including the directors must give access to stakeholder or a suitable alternative scheme. The absolute latest datefor schemes […]

Pension - thumbnail

David Cameron appoints former adviser to Tony Blair as new pensions minister

Following a cabinet reshuffle in light of last week’s general election, David Cameron has announced that Ros Altmann will be replacing Steve Webb as pensions minister. As the industry works with one of the largest reforms to the sector in almost a century, the former adviser to Tony Blair has been tasked with ensuring that the pensions revolution does not stray off track.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com