Paying for Care - a typical case study
Mrs Hardy, aged 89, suffered a severe stroke and was admitted to hospital. When discharged from the hospital, her family decided that she would be best cared for in a care home, because she was confused and had difficulty in communicating. She also needed help with dressing, toileting and the stairs. Her eldest son Edward has assumed the responsibility of looking after his mother's financial affairs.
The family home is valued at £250,000 and this will be sold to help fund the care fees. She has savings of £20,000 from which she receives interest and dividends. Her husband died 3 years ago, and she is in receipt of a widow's pension from his pension scheme, in addition to her state pension.
The family finds a nursing home and, after allowing for her existing income, Edward has to find further money each year from his mother's capital. Edward has a number of options, but his adviser has suggested purchasing an immediate needs annuity, which would help pay for the shortfall and increase by 5% per annum to cover fee increases. For an annuity of £10,000 per year, increasing at 5% per year, the single premium will be £45,609*.
The reasons the adviser gave were:
Figures correct at 05.03.09. Source Partnership Assurance