1 The Care Fees Planning Market & Immediate Care Plans The Care Fees Planning Market & Immediate Care Plans This Presentation is directed at professional advisers only It should not be distributed to or relied upon by private customers

2 Ash Waldron Account Manager Lifetime Care

3 UK Population aged 85+ MILLIONSMILLIONS You are here Sources: Census data Government Actuary’s 2006 based projections

4 4 The need for advice Source: Oliver Wyman Research 130,000 new care home residents per annum 14,000 get financial advice 68,000 need of financial advice every year 7,000 talk to a qualified adviser 75,000 privately funded 53,000 Fully self funding 22,000 Partly self funding

5 Who buys it? 87 year old lady with Dementia and failing 3 Activities of Daily Living with a life expectancy of 3.9 years, just moved into a care home and is selling her house. Usually purchased by an Enduring Power of Attorney / Lasting Power of Attorney

6 The Cost of Care Care homes with nursing: The average cost of a private care home with nursing in the U.K. is £731 per week Source : Laing & Buisson, Care of Elderly People Market Survey, 2012/13 ….but can cost considerably more.

7 The Cost of Care Domiciliary Care: A Rise and Retire package – usually 3 hours per day Typical rate - £12 to £18 per hour….. Overnight sitting - £50 to £75 per night Round the clock, 7 days per week package can cost more than a care home…

8 The Care Act 2014 The Care and Support Funding Reforms (April 2016) ONLY APPLY TO ENGLAND! Introduce Longevity Cap of £72,000 Increase means test threshold to £118,000 - or £27,000 if the house is disregarded Introduce accommodation charge of c.£12,000 pa A Universal Deferred Payment Scheme (April 2015) D e f e r r e d

9 Means Testing Assets over £23,250 (in England) which can include your property – No financial support from the Local Authority Assets less than £14,250 – Full financial support from the Local Authority but – Local Authority set maximum limits for cost of care – All available income compared with this figure – Personal Expense Allowance (£24.90 per week) Tariff Income

10 Income and Capital Almost everything that you have is taken into account : Pensions Investment Income Most State Benefits Savings & Investments Investment Bonds Possibly your Home Source : Care and Support Statutory Guidance for Care Act 2014

11 When home may be disregarded Spouse/partner still resides in dwelling Relative over 60 resides in dwelling Relative with incapacity resides in dwelling Dependent child under 18 resides in dwelling First twelve weeks after entering a care home Source : Care and Support Statutory Guidance for Care Act 2014

12 Deprivation No time limit needed to prove Negotiation, Mediation & Arbitration Deferred Payment Scheme or County Court Writs, Debt & Charging Orders S.423 Insolvency Act 1986 Source : Care and Support Statutory Guidance for Care Act 2014

13 State Benefits Attendance Allowance Higher rate - £82.30 per wk Lower rate - £55.10 per wk Carers Allowance - £62.10 per wk Nursing Care RNCC - £ per wk – paid directly to Care Homes only NHS Continuing Care

14 The Legal System Solutions for those who are unable to look after their own financial affairs. – Power of Attorney – Enduring Power of Attorney – Lasting Powers of Attorney o Finance and Property o Health and Welfare

15 The Legal System Buckley Judgement – Attorneys have fiduciary duties – Obtain & consider proper advice DENZIL LUSH Senior Judge 22 January 2013

16 Care Funding Solutions Pay from income Use investments to produce an income Equity Release Deferred Payment Agreement Draw down capital Immediate Care Plan

17 Deferred Payment Agreement Local Authority funded Equity Release Eligibility: Health – meet LA eligibility criteria Residential Care only A house plus less than £23,250 Enough Equity…. Costs: Interest rate of 15 year Gilt Rate % Current rate – 2.25% - reviewed January and June Plus setting up and admin costs

18 Immediate Care Plans For those already requiring care. Single Premium Regular Monthly Benefit Care at home or in a Care Home Paid for life - Guaranteed Benefits can be indexed Premium Protection Option Tax free - paid to registered care provider Taxable - when paid to policyholder

19 Options: Indexation Level RPI RPI +2% Choice of 3% to 10% Premium Protection Protects up to 25%, 50% or 75% of Premium - Long Term - Short Term Immediate Care Plans

20 The Providers Friends Life (Aviva) JRP

21 The Products Immediate Care Plans and Deferred Immediate Care Plans

22 Deferred Immediate Care Plans Immediate Needs - with a deferred period 1,2,3,4,5 year deferments Single or Annual Premiums NO Capital Protection Options

23 Underwriting and the Common Application Process Immediate Care Plans

24 The Application Process Illustration Common Application Single Application Medical Screenings Direct Issue Terms Underwriting Release Business 17 Weeks GP Report Care Home Report

25 Meet Sally

26 Moving to a Care Home Sally is aged 85 Currently in a wheel chair Suffered a stroke last year Slight short term memory loss Unable to look after herself at home

27 Current situation Current Income from all sources £15,440 net p.a. Care Fees and expenses £35,200 p.a. Shortfall in income £19,760 net p.a. Capital £200,000 - from sale of house and savings These figures are for illustrative purposes only.

28 Sally’s concerns……. Worried that she is a burden to daughter Choice of care Would like to be financially independent Worried about using up all her capital Would like to leave an inheritance

29 Daughter’s concerns…... Mother secure and well looked after Capital running out Having to move her mother again Her grandmother lived to 92 Although suffered a Stroke still very strong

30 Options available Invest the capital to produce income. Achieve a typical 3.5% net return on £200,000 = £7,000 p.a. Move to a cheaper care home. Current Income £15,440 + £7,000 = £22,440 p.a Meet the care costs from £200,000 capital. Risk the capital being used up. These figures are for illustrative purposes only.

31 Solutions Purchase Immediate Care plan – Cost a lump sum of £88,603 – Provides £19,760 p.a. to the Care Home increasing by RPI Tax Effective – Tax free benefits paid to registered care provider Surplus capital of £111,397 – £ 11,397 for immediate access – £100,000 invested for legacies These figures are for illustrative purposes only..

32 Sally’s views Choice of care Financially independent Flexibility for fee increases and personal spending money Not a burden on family Should be able to leave an inheritance

33 Daughter’s views Mother in Care Home of her choice Predictable net income Additional capital for fee increases Inheritance

34 In Summary Care Fees Planning is very rewarding BUT Requires considerable knowledge and expertise…. If you don’t know what you’re talking about – REFER!

35 Friends Life Limited Head Office: PO Box 582, Bristol BS99 5SN. Tel Facsimile Website An incorporated company limited by shares and registered in England and Wales, number Registered office: Pixham End, Dorking, Surrey RH4 1QA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. As part of our commitment to quality service, telephone calls may be recorded. Friends Life is a registered trade mark of the Friends Life group. Further Information Full details of our range of products & services are available on request This presentation is based on our understanding of current Law and HM Revenue and Customs practice which could change.