Learning Objective 8 Flashcards
Long Term care insurance (13 cards)
When is LTC required?
When person is unable to carry out certain activities of daily living (ADLs)
With an aging population there is a rise in LTC requirements
How do local authorities assess people’s needs?
- Undertake a financial assessment
- Look at capital - home, investments and savings etc.
- Any income, benefits, or pension income
Local authority assessments
When is the LA not able to force a sale of the home?
- If spouse / former spouse currenty lives there
- If a relative 60+ or under 18 lives at property
- If total assets (exc property) are under £23,250 (A deferred payment plan can be put in place to be repaid on death)
- There are rules in place for deliberate deprivation of assets (gifting home/assets away)
What are the savings thresholds (lower and higher)
- Lower - £14,250, anything below is not taken into account. Benefits and pensions still count.
- Higher - £23,250, above this you would need to full fund all care until savings drop below this figure.
Any savings in between results in part funding of care until it drops below the minimum
What types of income are used to determine whether LA will assist with care fees?
- Earnings
- Pension income
- State benefits
- Investment Income
- Letting income if own more than 1 property
What types of Activities of daily living must you not be able to do yourself?
- Eat
- Dress
- Bathe
- Use the toilet
- Dress
- Walk/move around
- Transfer (e.g. from room to bed)
equity release plans
What is a lifetime mortgage?
- A loan secured against the home which is repaid on death
- Interest can be rolled up or paid annually
- Home is still owned by borrower
- Home is included in estate but so is the debt
Equity release plans
What is a home reversion plan?
- Sale of either all / part of the home
- Person has a right of occupancy until death
- Sale price is normally reduced
- Rent is charged throughout
Meeting own care costs using savings
- You could buy an immeidate needs annuity
- Or use cash to pay for care to reduce amount of savings until below threshold
Meeting own care costs using Pension
- Could buy immediate needs annuity
- Or enter income drawdown and use payments
Meeting own care costs using sale of assets
- No CGT payable on main residence
- Potential tax liability on investment gains (product dependent)
Meeting own care costs using accelerated death benefits
- May be able to use life assurance contracts
- Or redirect WOL policies
Viatical Statement
Sale of existing life policy by a terminally ill person in return for a cash lump sum
