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Planning for health protection

George and Vera are in their late 50s. Both are now retired with a total pension income of £20,000 a year gross, which would reduce by about £5,000 if either of them died.

Their estate is worth about £500,000, of which £250,000 is represented by their jointly owned Wiltshire home and around £150,000 by joint bank and building society deposit accounts.

George and, to a lesser extent, Vera are starting to become worried about the possible costs of long-term care and how it may affect their children&#39s inheritance.

George is in good health and comes from a line of long-livers. Vera has high blood pressure and last year suffered what her doctor described as a mini-stroke.

Fortunately, it did her no serious harm although her memory is not quite what it used to be.

Ideally, George would like to arrange some cover for himself and Vera without reducing their investment income or their children&#39s inheritance significantly.

He thinks it might be possible to do this now because he understands that the Government is relaxing the rules on state support.

George would like to know your responses to the following questions:

1: What changes is and/or will the Government be making to funding the costs of long-term care and how will they affect him and Vera?

2: What are the relative advantages and disadvantages of a pure insurance arrangement and an investment bond-based scheme?

3: What impact would Vera&#39s state of health have on the cost of cover?

4: Should they, as a friend has suggested, avoid joint ownership of assets and, if so, why?

5: What action you would recommend to them? Give your justifications.

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