In a perfect world, Stephen Lowe, group external affairs and customer insight director of Just Retirement, says clients would think about potential care fees during their working lives.
In reality, Mr Lowe says the decision on how to fund care is usually left to the point of need when choices are limited. More often inquiries about covering the cost of care come from families needing to make quick decisions.
In circumstances where a care funding plan incorporating an annuity is the recommended solution, Mr Lowe says advisers need to shop around among the providers in order to find the most cost-effective solution and ensure clients understand the options available such as capital protection, a deferred period, escalation and how the plan can help with inheritance tax planning.
The first stage is to get the client underwritten, says Dean Mirfin, group director of Key Retirement. He says then the adviser should do the maths, compare providers and also, once the underwriting decision is known, compare the options for immediate and deferred policies.
If the client is concerned about dying soon after taking out the plan, Mr Mirfin says they can opt to protect some of the purchase price to protect against this in the early years, typically known as capital protection.
But like any benefit of this type Mr Mirfin says it increases the purchase price, the more of the value you protect the greater the purchase price. On death he says the value protected less any payments made up to the point of death are paid out.
Any adviser that provides advice on the funding options to pay care fees must hold the Chartered Insurance Institute CF8 or IFS Long Term Care qualification.
There is now a preference to seek advice from a Later Life Accredited Adviser who is a member of SOLLA (Society of Later Life Advisers), says Andrew Dixson-Smith, care fees adviser and director of Eldercare Solutions Ltd.
Seeking advice from a Solla member will ensure the best annuity option is considered for your clients.
Mr Dixson-Smith says you should obtain quotations from all current providers using a standardised application form and include all options with their appropriate costs.
