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Take good care of the house

The chances are that your clients all have their homes insured and would not contemplate for a moment leaving them uninsured. You will have made sure that they do not.

But what are they insured against? Fire? Earthquake? Flood? Explosion? Probably all of them. But how many people do you know whose homes were lost as a result of one of these catastrophes? Probably not that many.

Moreover, you and your clients probably have no idea what the risk of any of these events is. Yet they still pay for the insurance every year without fail.

OK, they have insurance because they want a house to live in. They want to know they will not be homeless if the worst happens.

But what if the client&#39s home has been lost in another way? What if they needed long-term care in later life and found they had to use the value of their home to pay for it?

Their home would be lost to them just as much as if they had lost it in a fire – only this time there would be no compensation, it would be gone for good. How could this happen?

In later life – mostly in our 80s admittedly – as many as one in four or five of us is going to need LTC.

If this means going into a care home, as it often does, then your clients can easily find themselves paying large parts of nursing home bills.

Although the NHS will pick up the nursing care element of nursing home bills, this will not usually amount to more than £70 a week – leaving a lot of money for the individual to find. Free nursing care applies in England from October 1, 2001 (separate arrangements will apply in the rest of the UK).

In England, this will take the form of a £70 a week payment for an individual in a nursing home assessed as having average needs. Pensions and interest or dividends on savings can help but very often there seems to be no alternative to selling the house.

If it is not careful, the Government is likely to find it has inadvertently found a way of introducing stealth benefits. People who need LTC in a nursing home now get a new, non-means tested benefit where entitlement depends solely on a person&#39s disability.

It is retrospective – it applies to people who were already in nursing homes on that date as well as those moving in for the first time after that.

On the assumption that none of us is going to go into a nursing home unless we have to, then, when the time comes, the NHS will assess our nursing care needs and will pay this part of the bill.

For those with more complex or intense nursing care needs or a particularly unpredictable condition, the NHS contribution is likely to be higher at £110 a week.

While being grateful for this extra help, anyone with savings or investments totalling over £18,500 will still be responsible for the remainder of any nursing home fees they may incur in the future.

This is where LTC insurance plans come into play. It can be arranged to bridge the gap between the costs which remain the client&#39s responsibility and the money available to meet those costs.

Although the cost of a nursing home place is high, by the time the NHS contribution has been taken off and you have added in the client&#39s pensions, attendance allowance and the interest on savings, the gap left to bridge can become manageable and the premiums quite affordable.

LTC insurance can help your clients achieve what many of us are so keen to do – make sure we do not have to sell up and see the money from our home disappearing as it is used up to pay care fees.

Nursing home costs across the UK average out at around £400 a week. Free nursing care – the £70 referred to above – along with attendance allowance and pensions will go some way towards this.

But if we want to bridge the gap and keep our home and its value in our hands – not those of the nursing-home owner – LTC insurance can do the job.

The cost will obviously vary from person to person but many people would be surprised to find out that for less than £40 a month initially, or a lump sum of around £4,500, a 65-year-old male could bridge that gap and keep the home value safe.

This is for a plan where benefits increase annually in line with RPI and where benefits cover both physical and mental incapacity and will continue for life. With the funding gap taken care of, the value of the home is your client&#39s to leave to a favourite grand-daughter and not to be spent at the local nursing home.

Make sure your clients know about this stealth benefit as well as the cost of a nursing home place and start planning for possible LTC costs now.

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