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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.


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