Who can provide advice on immediate care plans?
Providing advice on care fees and immediate care plans is a regulated activity and financial advisers must be appropriately qualified.
Both the London Institute of Banking and Finance and the Chartered Insurance Institute provide the basic qualifications in long-term care that meet the Financial Conduct Authority's requirements.
Some advisers choose to specialise in care planning and take enhanced qualifications and become members of the Society of Later Life Advisers.
Solla aims to assist consumers and their families in finding trusted accredited financial advisers who understand financial needs in later life.
What is required to purchase an immediate care plan?
Before advising on immediate care plans, advisers should ensure clients have had a care needs assessment and a funding assessment, undertaken by their local authority. These are fundamental to the advice process.
If a client is unable to handle their own affairs, a legal representative can act on their behalf.
It is also important that you know what state benefits they are entitled to and whether they are receiving them.
Finding out what benefits are available to clients can be quite time-consuming. To do this, you must have an up-to-date, good working knowledge of the eligibility criteria.
The immediate care plans and the rates available will vary depending on the client’s circumstances and life expectancy, so the information you will need to provide about your client, at a minimum, is:
- age
- state of health and
- medical history
These help a provider to calculate an annuity rate, which will be applied to the amount you pay for the immediate care plan.
For example, if after assessing a client’s age and health, the provider offers them an annuity rate of 15 per cent, and they paid £200,000 for the annuity, they would receive £30,000 a year directly towards care costs.
If the client were to live longer than seven years from this point, they would end up receiving more money than they paid for the annuity — because the money will continue to be paid out for as long as they live.
Many providers have minimum and maximum single premiums that are determined by their minimum and maximum care premiums, and these can vary between providers.
Whether to choose level or increasing benefits
Unfortunately, the cost of care is not static: it rises frequently and sometimes the increases are more than the level of inflation. If level income payments are chosen, they may quickly fall short of the full cost of care.
Clients can provide for this by including increases into the immediate care plan before the plan starts. The level of increases allowable vary between providers, but typically can be:
