Going into care can be a real strain and stressful time for all those involved. As it has been the family who have had to make the painful decision that their parent, or elderly relative, is no longer able to look after themselves.
On average care home fees are approximately £2,163 a month, leaving elderly people and their families to worry about how to they pay for them. One option is to sell the family home to pay these costs. And so selling the family home to pay or sometimes just help for these care costs is quite common. Another fear is dying without a will, or leaving the family with funeral costs.
A major part of the problem is the sky-high cost of care homes and the worry families have about how this will be paid for — and whether you can get financial help from the State. On average, care home fees are £2,163 a month.
Here, we highlight some of the financial products and alternative solutions that are offered to supposedly help our elderly and vulnerable pay for their Care from their entire life savings.
CARE FEES AVOIDANCE SCHEMES
Nearly all pensioners have worked long and hard all their life and fear thy will lose their home when they have to go into care. Unfortunately, this has been realised by some companies who claim to be able to stop the sale of your home to pay for the care fees . They say that they can do this, by putting the house into a Trust. Usually these firms are unregulated, and when the time does arrive and care is required, it will effectively be completely disregarded.
As Local Authorities have the power to void such schemes if they believe they were specifically designed to avoid paying the care bills. Worse still, this type of trust means that an upfront fee requires payment of easily around £1,000, which once paid the family will not be able to get refunded.
There is currently no time limit on how far back a Council can investigate to see if you have given your house away to avoid care costs. Another reason so many pensioners are convinced to put their money into investment bonds is because sometimes these can be exempt from means-testing.
This specifically applies if they have been set up as life assurance contracts — though critically there must not be any mention of this intention in the contract. And additionally enough money must be put aside to allow pensioners to live and avoid high charges to gain access to their money in these bonds if needed early.
FUNERAL PLANS
Funeral plans are often advertised to older people on the TV and in the newspapers. Many of these people have taken out these plans which pay out a guaranteed lump sum upon your death. This money is then used to cover your funeral costs which costs depend on where you live in the UK.
However, it is important before you take out these plans that you read the small print. As their only value is if you die soon after taking out the policy, as this is when you qualify for the full payout, as also you have paid in only a few premiums. But as we are all living longer — the male average life expectancy is 78, and for women, it’s 82 — many end up paying more in premiums than the policy actually pays out.
In most cases, and after using a calculator, many would have been better off using a simple savings account as they would receive a similar return but, would also have access to their money at all times if they ever needed it. And could also stop paying the premiums at any time they chose.
EXPENSIVE INHERITANCE TAX COVER
Many investors took out life policies to help plan for a set sum payout upon their death. This was done to help them cover the costs of inheritance tax. However, most of these policies have ‘variable’ premiums.
Therefore, after years of paying the same sum each and every month, customers must increase their premiums or face losing a huge chunk of their cash. This is because the underlying investment plan designed to provide their cash payout upon their death isn’t growing fast-enough. And greater life expectancy and longevity means that the insurers that are behind these policies don’t have enough cash to satisfy and cover it. And so simply increase and raise the premiums to cover the shortfall.
This means that many of these elderly people who have these policies won’t realise what is due to happen and will get hit with huge premium increases at a time they can ill afford it.
Many complain that they did not receive adequate advice when they bought the policies, and were also sold them with hugely optimistic growth expectations — and so many will die without having a big enough cash payout.
WILL-WRITING SERVICES
Most people want to ensure as much of their estate is passed onto their loved ones when they pass away. But these good intentions are often worthless with poor will-writing services.
On average it can cost anything between £70.00-£120.00to write a will, but some people pay hundreds for a similar service if they use the wrong law firm. As some legal services that includes will-writing can be done by unqualified and unregulated individuals or companies.
SO THE BIG QUESTION WHO CAN YOU TRUST?
Whether it’s funding care home costs, buying annuities, using equity release, or simply deciding what financial products to use, many elderly people feel unable to trust any financial institution with their money. Therefore, honest and impartial advise is the real premium and so always ensure you do your research. An option is the Society for Later Life Advisers via: www.societyoflaterlifeadvisers.co.uk or call them: 0845 303 2909.
Apart from having specialist qualifications, all its membership has undergone further testing so that they are accredited. So before seeking their advice, check the adviser’s qualifications.
When discussing long-term care, they should hold one or both of the following 2 qualifications: The Certificate in Long Term Care Insurance (CF8) or the more advanced Long Term Care, Life and Health Protection (G80). If considering equity release, where money is taken out of a house using a type of mortgage, the key qualification is ER1. If possible, ensure a relative — and someone who understands what is being said — is always in the room when advice is sought and given.
Ask sensible questions, such as does the product use up all of the person’s available cash? Is there any left over, and is it easily accessible? How much capital will the investment eat up? How much income is it expected to generate? What if the capital falls, is any of the money guaranteed?
Don’t worry if it takes time to understand what you’re being sold. If neither you, nor your family member, has understood the adviser’s explanation, ask again until you do — if they haven’t made themselves clear, it’s not your fault, it’s theirs.
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